Attention Getter: How many of you shop online at least once a week? According to the data gathered by Statista. com June 2012, about 70 percent of internet users in the United States had made at least one purchase via any device during 2011. Over the last decade, E-Commerce has been growing faster and of course, such dramatic change on the ways of shopping has brought millions of profits and business opportunities. However, the collection of e-commerce sales tax has always been a controversial topic.
On September 15th, as a result of a new law taking effect in California, the world’s largest online retailer, Amazon. com Inc. began to collect state and local sales taxes on California purchases. Benefits to Audience: For us, it may sound like a bad news, as it indicates an end of tax free era. However, it is important that we understand that online sales tax by no means only negatively affect consumers. Instead, the new law would transform our ways of shopping again in a more board sense by affecting different groups in business world, whether negatively or positively.
Thesis and Preview: Today, I would like to talk about the effects of the e-commerce sales tax on the three stakeholders involved in this event: consumers, Amazon and state governments. Transition: First, let’s look at how online sales tax would impact consumer behaviors. Main Point 1: When talking about sales tax, we, as consumers ourselves, apparently would love to spend less money getting the best goods and service. A. So a lot of times online shopping would first come to our mind even when we see something worth buying in a shopping mall, we would still refer to different online retailers to compare its price and decide where to buy it.
B. usually we end up buying it online because the price online are usually lower and even if the price is the same as that in the mall, we are still pretty sure we’d pay 5% or more below what we pay at a local store. 1. And the reason was simple: Amazon hasn’t been required to collect sales tax on the behalf of consumers for years in nearly all states. C. Since the tax benefit is gone, consumers who don’t want to wait for their products may visit physical stores more frequently rather than placing orders with shipping delay and shipping cost at home. . According to a paper published on Quarterly Journal of Economics, applying existing sales tax to the internet may have negative impact of reducing online buyers by as much as 24 percent. Transition: Next, let focus on Amazon itself. Main Point 2: Recent years, Amazon has struggled to reach agreement with several state government on the tax issue.
A. Back in 1992, Supreme Court made a decision that required any retailer with a physical presence in a state, such as a warehouse, to collect sales tax from consumers there. B. y taking advantage of the law made by Supreme Court, for years, the success of Amazon was mostly based on the competitive price offered with tax free policy compared to what price its main competitors offer C. Now since many other states are considering similar legislation as California state government did, Amazon would face more intense competition from other popular online shopping websites with physical stores that are already required for sales tax for years, which may result in a significant sales decline and loss of potential customers. . As a matter of fact, Amazon is believed to experience a recent deceleration in growth partly because of tax collection, stated by RBC Capital Markets analyst Mark Mahaney in February this year, though he added that over time that effect should ease. Transition: Finally, let’s move on to the government perspective. Main Point 3: The reason behind the tax collection law is that although e-commerce has boosted, states continue to suffer from recession-era budget cuts. A. As online retail sales increases sharply, so does untaxed online sales.
Internet sales tax is no doubt, a huge amount of revenue for the state government. 1. According to estimate of Illinois Department of Revenue in June 2011, the unpaid Illinois use tax on e-commerce sales could reach 212 million dollars in 2013. B. If I show you this spreadsheet you would be surprised at what a huge impact online sales tax could have on the deficit problem. 1. According to Extrabux. com in April 2011, if every state imposed a tax on all online sales, they would receive an additional $10 billion in revenues per year.
That would reduce the average state’s budget deficit by 17%. Not to mention that Indiana and Iowa could close more than half of their budget deficits. 2. The collection of sales tax are expected to relax the deficit problem of state government and benefit more taxpayers by helping fund police, school teachers and other much-needed programs. Transition: In conclusion, Conclusion Review: Today I have discussed how the collection of online sales tax would affect consumers, Amazon and the state governments.
Final Comment: Fortunately, no clear sign of whether Amazon would face a crisis has been shown since several other states are still waiting for the tax rules to be implemented in the next few years. Also, how Amazon responds to the issue would largely determine to what extent it will be affected. Here is a list of some states where “Amazon tax” payoff are scheduled to arrive in the near future, reported by Forbes in April, 2012. For those of you who are extremely addicted to online shopping, maybe it is time to stock up your essentials before the tax policy lands on your state.
NOBBS, JEFF. “The REAL Numbers Behind the Internet Sales Tax Debate.” Web log post. Extrabux. Extrabux, 13 Apr. 2011. Web. 06 Mar. 2013. http://www.extrabux.com/blog/2011/04/the-real-numbers-behind-the-internet-sales-tax-debate/Goolsbee, Austan. “In A World Without Borders: The Impact Of Taxes On Internet Commerce.” Quarterly Journal of Economics 115.2 (2000): 561-576. Business Source Complete. Web. 6 Mar. 2013.
Wood, Robert W. “The Era Of No Amazon Sales Taxes Is Nearly Over.” Forbes. Forbes Magazine, 30 Apr. 2012. Web. 06 Mar. 2013. http://www.forbes.com/sites/robertwood/2012/04/30/the-era-of-no-amazon-sales-taxes-is-nearly-over/Byrnes, Nanette. “Amazon Tax Payoff Starts to Arrive in Some U.S. States.” Reuters. Thomson Reuters, 20 Feb. 2013. Web. 06 Mar. 2013.
“U.S. Internet Users Who Are Online Buyers 2010-2016 (fee-based).” Statista. Statista Inc., June 2012. Web. 07 Mar. 2013.
“Estimating Illinois’s E-Commerce Losses: June 2011 Update.” Illinois Revenue. Illinois Government, 17 Nov. 2011. Web. 9 Mar. 2013.
Cite this Online Shopping
Online Shopping. (2016, Dec 09). Retrieved from https://graduateway.com/online-shopping-2/