From:	"Hacker, Barbara" <Barbara_Hacker@ci.springfield.mo.us>

To:	"'Rosenker@gmu.edu'" <Rosenker@gmu.edu>

Date:	9/2/99 9:53AM

Subject:	ecommerce

Comments to the Advisory Commission on Electronic Commerce

Submitted on behalf of the City of Springfield, Missouri

The City of Springfield, Missouri is concerned about the impact of

electronic commerce on our community. It impacts the community in two

general ways - the ability of the government to provide services and

infrastructure and the impact on local businesses.

Sales tax generates 48% of the City of Springfield, Missouri's operating

budget. In fiscal year 1999, taxable sales in Springfield were $3 billion.

Studies have indicated that Internet sales account for 3 - 4% of all sales

in the country. If the national standard of 3% is applied to Springfield,

the community lost $90,000,000 in sales last year to Internet businesses.

This translates to a loss of $900,000 in general sales tax revenue. This

$900,000 could put an additional 22 police officers on the streets. In

addition to the 1% general sales tax, the City of Springfield also levies a

1/4 of 1% capital improvements sales tax, 1/8 of 1% transportation sales

tax, and participates in a county law enforcement sales tax. Losses to

Internet sales on each of these taxes equal $225,000 for capital

improvements, $112,500 for transportation improvements, and $178,000 for law

enforcement improvements such as additional police officers and jail

improvements. The City of Springfield estimates its annual loss to

electronic commerce to be over $1.4 million. If these products were

purchased locally or if they were taxed at the same rate as local purchases,

the community would benefit from improved City services and infrastructure.

As important as the loss to the City budget is the impact of electronic

commerce on local businesses. Again using the nationwide standard of 3%,

Springfield businesses are losing $90 million in sales annually. Some Mom

and Pop businesses who find it difficult to compete against chains and big

boxes will find Internet sales to be their death knell. The cause of death

will not be just the convenience some people find in Internet transactions

but the unfair advantage Internet businesses hold by not being subject to

local sales taxes. Locally, the community will lose not only a business but

also the multiplier effect caused by dollars spent at that business.

Dollars spent locally are multiplied locally as the owners and employees

spend their customers' dollars for other goods and services in the

community. The multiplier effect of electronic commerce on a local

community may be greater than the estimated 3 - 4%.

We believe that it is important to tax all businesses fairly. Missouri

merchants and merchants selling into Missouri should be treated equitably.

Currently electronic commerce has an unfair advantage. We encourage the

Advisory Commission on Electronic Commerce to develop an equitable method of

taxation for electronic sales.

Submitted by:

Mary Lilly Smith

Economic Development Coordinator

840 North Boonville

Springfield, MO 65802

417-864-1094

mary_lilly_smith@ci.springfield.mo.us