Numbers show reality of e-sales

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March 6, 2000
Web posted at: 11:24 a.m. EST (1624 GMT)

by Judi Hasson

(IDG) -- The Census Bureau today issued its first report on retail electronic commerce sales, reporting that Americans spent more than $5 billion buying retail goods over the Internet in the last quarter of 1999.

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While it appears that e-commerce took off like a rocket during the heavy Christmas shopping season, it still accounted for only .6 percent of the $821.2 billion in total retail sales during that period, according to the Census Bureau, which tracks all retail sales.

Still, the new information is likely to fuel the debate over whether to impose sales tax on goods sold online.

State and municipal leaders are torn over the issue. A contentious commission headed by Virginia Gov. James Gilmore will meet later this month to come up with a recommendation on whether to extend the moratorium on taxing Internet purchases. The three-year moratorium ends in 2001.

California Gov. Gray Davis speaks for many when he says that he opposes Internet sales taxes because they might "kill the golden goose laying the egg."

Yet cities and counties fear the loss of sales tax revenue and say cyberspace purchases should be treated no differently than items bought at bricks and mortar stores. "The point is not whether itās going to hurt or hinder. There is a need for the collection of sales tax," said Shawn Bullard, a spokesman for the National Association of Counties.

In a speech heralding the trend toward e-shopping, Commerce Secretary William Daley said Thursday that the "old pigeonholes we use for retail sales donāt work for cybershopping."

He said the Census Bureauās plan to regularly report on Internet retail sales would help the government keep tabs on its growth and on the shopping habits of Americans.

"Billions of dollars of decisions are being made by [those] who have a need for accurate statistics," Daley said. "This number is the new benchmark ÷ our first government economic indicator for the e-economy."

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