Explosive Growth Expected in E-Commerce Sales

WASHINGTON, D.C. – Online retail sales are expected to grow by upwards 500 percent over the next two years, according to more than half of those responding to a recent United States Chamber of Commerce/KPMG survey of 150 policy makers, company executives and association heads.

Nineteen percent of the survey respondents predicted Internet sales, estimated to be $8 billion last year, would top $100 billion by 2001. Over half (53%) thought it would reach $50 - $100 billion and 21% thought sales would reach $25 - $50 billion. Only 7% thought that Internet sales would remain lower than $25 billion over the two year period.

The survey was conducted during a conference on E-Commerce Taxation at the United States Chamber of Commerce/National Chamber Foundation and sponsored by KPMG LLP and Deloitte Touche. The conference explored the global implications of E-commerce, state and local impacts of the tax moratorium on Internet sales, and examined how Internet taxation might affect businesses and customers.

Douglas Graham, a partner with KPMG's Financial Services Consulting practice, feels that "we are in a transitionary period right now, one in which there is heightened interest in adopting fair policy. "

More than three-fourths (76%) of the survey respondents said, for the purposes of taxation, remote electronic transactions should be treated the same as catalogue sales. And most (56%) thought a sensible legal, fiscal and regulatory framework that minimized government regulation could be adopted for the Internet

"It's clear that we have to build a new uniform commercial code for business," said Graham, who addressed a panel at the Forum. "And it is encouraging that U.S. government and business leaders have built a sense of urgency on e-commerce."

U.S. Chamber Executive Vice President Bruce Josten noted, "Any discussion of E-commerce taxes is premature, if not foolhardy, until rules-of-the-road for Internet businesses and transactions are developed."

"E-commerce remains fundamentally different from traditional markets – it lacks many of the physical attributes of traditional exchange, it may consist of largely intangible assets and transactions may take place in relative anonymity," Josten added. "Government officials at all levels should proceed with caution."

The United States Chamber of Commerce is the world's largest business federation, representing more than three million businesses and organizations of every size, sector and region.

KPMG LLP is the U.S. member firm of KPMG International. In the U.S., KPMG partners and professionals provide a wide range of accounting, tax and consulting services. As a provider of information-based services, KPMG delivers understandable business advice — helping clients analyze their businesses with true clarity, raise their level of performance, achieve growth and enhance shareholder value. KPMG International's member firms have more than 100,000 professionals, including 6,800 partners, in 160 countries. KPMG's Web site is http://www.us.kpmg.com/.

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