California lawmakers fire back at Amazon over sales tax

July 14, 2011 12:00:00 AM PDT
State lawmakers joined with brick-and-mortar businesses on Thursday to fight back against Amazon.com. Amazon wants voters to overturn a new law that taxes most purchases through the web retailer, but it may not be possible for Amazon, or voters, to do that.

"Amazon has ... well ... has literally declared war on California," said Assm. Charles Calderon, D-Montebello.

Lawmakers who led the charge on the state's new so-called "Amazon tax" law -- which forces certain e-tailers to start collecting the sales tax -- fired back at the Seattle-based company. They say Amazon's effort to put the issue before voters in a referendum is unconstitutional. While anybody can try to overturn a law the Legislature passes through the referendum process, Democrats say it does not apply to bills attached to the budget, known as trailer bills.

"If any bill can just be on referendum, then how can we ever get a budget in California?" said Calderon.

Attorneys for Amazon say the right to a referendum on any bill passed by majority vote is sacrosanct, so they will proceed. They're trying to save California jobs.

"I've talked to many who have lost 70-80 percent of their income overnight," said Rebecca Madigan from the Performance Marketing Association.

The trade association representing 25,000 California-based affiliates of e-tailers like Overstock.com and Amazon desperately wants the law overturned. Those California-based websites provided links to Overstock and Amazon for a cut of the sales. Rather than start collecting the state sales tax, Overstock and Amazon said good-bye.

"This is such an important issue for California. It's a process that allows citizens to take control of laws that clearly are bad for the state. Let the voters decide," said Madigan.

Meanwhile, businesses with actual storefronts in California continue to struggle with what they call an unfair playing field where they have to collect the sales tax. Their customers often leave their stores saying they can go online and avoid paying the sales tax, forcing Lauren Lundsten, owner of Swanberg's on J, to match the tax free deal just to keep customers.

"We can give them 10 percent off or you can eat the sales tax, or whatever. It's the same thing. It's 10 percent off just to complete a deal because you know they'd walk out the door," said Lundsten.

Democratic Attorney General Kamala Harris will decide whether a budget trailer bill can be legally put before voters. If she approves it, Amazon will need 504,000 valid signatures before it can go on the ballot next year.


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