UT Economist: Business-to-Business E-Commerce Growing

Knoxville – Internet commerce continues to grow in Tennessee and around the United States.

A University of Tennessee economist said this growth is benefiting two specific kinds of e-commerce.

“The real winners in all this are companies that use business-to-business, or B2B, transactions to facilitate their operations, and individuals who have better shopping potential,” Dr. Matt Murray said.

But Murray said there is one big loser in this arrangement: state and local governments, who lose out on collecting sales tax revenues.

Each year, Tennessee misses out on millions of dollars in potential sales tax revenue when shoppers buy goods and services on the Internet, instead of buying them locally, Murray said.

Murray said when most people think about e-commerce, they think about individuals buying books or music. But he says that-s not correct.

“The business-to-business side of e-commerce predates shopping by individual consumers,” Murray said. “In fact, today the lion-s share of Internet transactions is between businesses and businesses, not businesses and individual consumers.”

The state of California recently extended a ban on sales tax collection on e-commerce, and other states are doing the same.