The Explosive Growth Of E Commerce

1732 Words7 Pages
The table below is the U.S. Census Bureaus reports a sharp increase in the retail E-commerce sales as a percent of total quarterly retail sales since the first quarter of 2006 to the last quarter of 2015. E-commerce sales in 2015 accounted for 7.3 percent of total sales, which is 0.9 percent higher than what it accounted in 2014. The explosive growth of E-commerce transactions greatly affects the revenue of sales taxes and has made whether to levy taxes on Internet sales a hot debate. From the consumers’, online retailers’, and technology companies’ position, imposing sales tax on Internet sales will somehow limit the growth of both E-commerce and the Internet usage. From the side of brick-and-mortar retailers and the government body, tax…show more content…
The total revenue loss from e-commerce equals the total sales due to the Internet sales minus the amount of use taxes collected. However, a latest or cumulated loss from Internet sale occurs only when the tax on the transaction would have been collected without e-commerce. The final sales tax revenue loss should be the combination of these two factors. B2B transaction usually plays a significant role to the state and local government loss. For instance, in 2003, it was responsible for 70% of the expected incremental revenue loss, while B2C sales were responsible for the rest 30% (William). Other Factors that would lead to sales tax revenue loss Although E-commerce is the biggest factor that leads to a sale tax revenue loss, it is not the only reason. The shift of consumption patterns is the second foremost factors. With the shift to a greater consumption to the services and less consumption to the goods, the sales tax revenue will also be negatively affected, since the service are less taxed comparing with goods. As a result, the taxable goods purchase in Georgia fell by 8.2% in 2014, which is estimated to cost the state $389 million lost of sale tax revenue (Richards). The legislated exemptions will also narrow the tax base that will cause a decrease in the revenue. The switch from having sales tax on automobile purchase to the Title Ad Valorem Tax, the exemption of energy used for manufacturing and two sales tax holidays lead to 31% down Georgia’s
Open Document