Today, more than 100 tobacco e-tailers sell tobacco tax-free and without verifying buyers’ age — creating challenges for parents, public policy advocates, and lawmakers. By 2005, tobacco e-tailers will sell $5 billion of tobacco products, causing states to lose $1.4 billion in tax revenue, according to a new consumer packaged goods Brief, “Online Tobacco Sales Grow, States Lose,” by Forrester Research, Inc. (Nasdaq: FORR).
“Tobacco products are the perfect online replenishable because they are cheap to ship, nonimpulsive, and not taxed, which saves heavy smokers a lot of money,” said Robert Rubin, director at Forrester. “Two-thirds of Internet tobacco retailers are located on Indian reservations, making it impossible for states to collect tax revenue.”
“States will have to say goodbye to lost tax revenue, but technology will play a vital role in stymieing underage purchases,” said Rubin. “Federal lawmakers and the antismoking lobby will force tobacco e-tailers to place bar codes on all shipped boxes containing tobacco products. Child-safety software vendors will help keep kids away from tobacco sites by providing parents with a PC-based filtering tool to restrict access to tobacco Web sites — similar to today¿s filters for pornography sites.”