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Report: Sales Tax Won't Deter e-Shoppers

5 Feb, 2003 By: Hive News

Having to pay sales tax for online purchases will not deter many shoppers, analyst firm Jupiter Research reported today.

While it is likely within three to five years that tax will be imposed for online transactions to residents of all states and localities with sales taxes on retail transactions, the firm contends it will not be a significant impediment to the growth of the online retail channel.

Based on a November 2002 consumer survey Jupiter Research fielded, the report Sales Tax: Avoidance Is Imperative to Few Online Retailers and Ultimately Futile for All found that most online shoppers are either unaware of the fact that sales tax can be avoided by searching across multiple online retailers or do not see it as cause to choose one retailer over another.

Only 46 percent of consumers were aware that they could avoid sales tax by comparison shopping at many different retailers' Web sites. Of those aware, 61 percent do not go out of their way to find online retailers that don't charge sales tax. Thirty percent of this group sometimes looks for an online retailer that will not charge sales tax and only 9% always looks for a retailer that will not charge sales tax.

"With budget deficits on the horizon, state and local governments have stepped up their efforts to collect sales tax from online retailers. The collection of taxes is no longer an if but a when,” Jupiter senior analyst Ken Cassar said. “Fortunately for online retailers, only a minority of their customers are aware of the fact that they can avoid sales tax by shopping around. Among those that are aware of the fact that sales tax can be avoided, only 9 percent, actually make merchant selection decisions based upon whether or not that retailer charges sales tax. The benefits of multichannel integration overwhelmingly outweigh the importance of sales tax avoidance.”

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