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GAO-02-83R 1 (2001-11-06)

handle is hein.gao/gaocrptanzt0001 and id is 1 raw text is: SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 November 6, 2001 The Honorable Max Baucus, Chairman The Honorable Charles E. Grassley Ranking Minority Member Committee on Finance United States Senate Subject: Update on State and Local Revenue Loss From Internet Sales As you requested, we have examined the Census Bureau's estimates of e-commerce in 1999' to determine whether they would provide a basis for us to revise any of the results we presented in our 2000 report on sales tax losses from e-commerce.2 In that report, we used a range of available private-sector forecasts of Internet and total remote sales as the basis for several scenarios illustrating the impact of such sales on state and local sales and use tax revenues. The scenarios showed that there is considerable uncertainty about the size of the impacts and how various assumptions about sales, compliance, and other factors contribute to that uncertainty. The purpose of this letter is to present our conclusions from a review of the Census estimates. In summary, we found that Census' new e-commerce estimates do not provide a basis for revising the results in our 2000 report. Census' definition of e-commerce is 3 broader than Internet sales. Because of the way firms provided information on their e-commerce sales to Census, Internet sales cannot be separated from the broader e- commerce sales at a level of detail that allows us to compare Census' results with the Internet sales estimates we used in our report. In our 2000 report, we made a distinction between sales by businesses to other businesses and sales by businesses to individual consumers. Private-sector forecasters typically estimate these two categories of sales separately. The Census Bureau also makes separate estimates for broad categories of e-commerce. Census' estimate for manufacturers' value of e-commerce shipments is its estimate that is closest in concept to the estimates of business-to-business Internet sales that we used 'See 1999 Multi-sector report, E-Stats, (Mar. 7, 2001), www.es.s ats. 2See Sales Taxes: Electronic Commerce Growth Presents Challenges; Revenue Losses Are Uncertain (GAO/GGD/OCE-00-165, June 30, 2000). 3The Census Bureau's e-commerce measures report the value of goods and services sold online whether over open networks such as the Internet, or over proprietary networks running systems such as Electronic Data Interchange (EDI). (See E-Stats kMar. 7, 2001) . The Internet sales estimates we used in our 2000 report covered only sales transacted over the Internet. GAO-02-83R Update on e-Commerce Revenue Losses

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