US Retailers' Decision To Levy Online Sales Tax Dismissed As 'PR Stunt'

by Mike Godfrey, Tax-News.com, Washington

18 February 2003

Reporting following the recent announcement that several large US retailers, including Wal-Mart and Toys R Us are to begin collecting sales tax on their e-commerce business, the New York Times has suggested that the actual amount of additional revenue collected as a result of the initiative is likely to be negligible.

Arguing that the move is significant in a political rather than economic sense - given that many of the country's largest traditional chains already charge sales tax on online purchases, and that the biggest opponents of the move, such as Amazon, eBay, and Dell Computer are unlikely to budge from their position - the New York Times revealed that:

'Analysts say the online sales taxes from the recent new retail converts are likely to yield little more than $30 million in new online sales revenue this year - which would not amount to much as it is split up among the nation's 7,500 or so state and local tax jurisdictions.'

Speaking to the newspaper this week, H. Robert Wientzen of the Direct Marketing Group also dismissed the recent announcement as of no real economic significance:

'It's a P.R. stunt,' he argued, observing that it is easy for Wal-Mart and other large retailers to make such a gesture 'because they have huge tax departments worrying about this issue,' but that: 'The real internet companies would really have a tough time doing this.'

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