New Report Predicts $1 Billion Revenue Loss to State and Local Governments Over Next Five Years Due to E-Commerce Sales

A newly-released study by well-respected University of Alabama at Birmingham (“UAB”) Marketing Professor Robert A. Robicheaux and his research staff provides statistical evidence of the substantial amount of sales and use tax revenue that the State of Alabama and its localities lose each year to e-commerce. The study also describes the ripple effect caused when instate retailers lose those sales. Dr. Robert A. Robicheaux, Estimates of Alabama Losses Due to E-Commerce (Feb. 21, 2012) (Available here). The study shows that a significant amount of sales and use tax revenue owed by consumers to the State of Alabama and its local governments is lost due to a lack of compliance by consumers and the government’s inability to force remote sellers to charge and remit sales tax.

According to the landmark study, this results not only in substantial sums of lost sales and use tax revenue, but it also lowers Alabama’s economic output, which in turn costs Alabama residents jobs and reduces their household income, thereby reducing the State’s income tax revenue. The study concludes that the loss of sales/use tax revenue from online purchases alone will cost the State and local governments more than $1 billion over the next five years, unless federal laws are enacted to prevent it.

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