Sales tax: Its potential impact on the repeat mail order customer

The results of a national survey of mail order customers assessed differences between repeat customers who presently purchase from firms that charge a sales tax and repeat customers who do not buy from such firms. The results of a discriminant analysis, with these two groups serving as the grouping variables, suggest that they are different in price sensitivity. Specifically, at various levels of increasing purchase amount and tax rate, repeat customers who don’t buy from firms that tax responded more negatively concerning intent to place an order. A potential problem for mail order companies is identified in the event that repeat customers who don’t buy from firms that tax are required to pay sales tax in the future.