California Tax Bill Becomes Law

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It's official in the state of California; Amazon and other Internet retailers are now required to charge a state sales tax on any purchases made by California customers.

Governor Jerry Brown signed the tax collection law in hopes that it will save existing jobs and create new ones in the state.

"[This law will] create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years," says Brown.

The basis of the law comes from economic experts who predict that it will help brick-and-mortar stores with actual sales staffs compete more equally with e-commerce businesses that require far fewer people to fill orders and operate. Those in favor of the legislation claim that Amazon, based out of Seattle, was essentially receiving unfair tax advantages over physical stores because shoppers weren't required to pay a sales tax.

In addition, there are expectations that Amazon will open a distribution center in California that currently hosts about 20 percent of the company's market. Amazon said that they plan to bring approximately 10,000 new jobs to the state, as well as invest $500 million over the next few years.

Initially, the e-commerce giant was planning on presenting a referendum that would ask voters to overturn the sales tax collection law that took effect on July 1, but they eventually compromised with national retail chains like Walmart and Target, as well as local and/or independent stores. Now, though the bill will take immediate effect, collecting sales taxes won't be required until September 15, 2012.

"The new law is a big victory for Main Street retailers that have battled to close a loophole that gives Amazon and other e-tailers special treatment in the tax code," says the Retail Industry Leaders Association, the group that is currently lobbying for similar laws across the country.

I can't help but wonder, though, if Walmart counts as a "Main Street retailer."

 
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2 comments

JimV 09-30-2011 1:16 PM

How will this affect us Canadian internet retailers?

Jim, Peterborough, ONT

Michael Garrity 09-30-2011 1:25 PM

Well, for now it's not really even an issue for most states here, so I'd imagine there isn't going to change anything up there, and certainly not immediately.

I did do a quick Google search, however, and found this on About.com, which could maybe shed some light on the subject for you.

canadaonline.about.com/.../shopshipcanada_2.htm

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