California Senate approves 'Amazon tax' measure |
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Things are heating up for Amazon.com on the sales tax front again. The California Senate just passed a bill that would require online retailers like Amazon to collect sales tax on web purchases. According to reports, the measure was part of a $5 billion budget package making its way through the California legislature. Virginia, Colorado and Illinois are also considering sales tax bills targeting online retailers.
Amazon — which only collects sales tax in a handful of states, giving it an advantage over brick-and-mortar retailers — fought hard against a similar wave of bills last year, and managed to stomp out most of them. But for cash-strapped states, desperately seeking new sources of revenue, the "Amazon tax" continues to be a powerful draw.
California lawmakers introduced a similar bill last year, but Gov. Arnold Schwarzenegger threatened to veto it, and the matter was dropped. But with California in the midst of a budgetary meltdown, the idea has popped up again. According to reports, the "Amazon tax" bill is expected to generate $107 million in tax revenue annually for California.
The new California bill, like the one last year, says that online retailers like Amazon that work with local affiliates have a physical "nexus" in the state and are thus required to collect sales taxes. Affiliates are websites that link to Amazon products in exchange for a fee on any resulting sales.
Last year, Amazon threatened to cut off affiliates in California and other states that passed such legislation. That threat helped derail some of the bills. North Carolina, Rhode Island and Hawaii passed sales tax legislation, and Amazon ended affiliate programs there (though it later reinstated Hawaii affiliates after the governor there vetoed the bill in question).
Gov. Schwarzenegger remains opposed to an "Amazon tax," but a statement from his spokesman Aaron McLear appeared to leave some wiggle room, by my reading (via The Sacramento Bee): "The governor has never supported this proposal, so it would be a very tough sell."
So far this year, Amazon has been silent on the issue, at least publicly. An Amazon spokeswoman didn't immediately respond to a request for comment.
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