International News - E-tailers to lose tax-free benefits

US e-tailers could lose their tax-free shopping status if cash-strapped state governments band together successfully to change the law.

In the mid-1990s, when e-commerce was in its infancy, law-makers believed tax legislation could have scuppered fledgling e-tailers. So online retailers were granted sales tax exemption in states where they had no physical presence.

However, the success of online shopping has led officials to reconsider in the face of budget shortfalls - a University of Tennessee study says states lost US$13.3 billion (£8.25 billion) in revenue last year from uncollected e-commerce sales taxes.