Gov. Brown signs compromise on Internet taxes

September 24, 2011 12:56:03 AM PDT
This summer, state leaders approved an online sales tax, then Amazon fired all of its California affiliates and poured millions of dollars into a referendum to overturn the tax. Both sides agree that one way or another, after a one year delay, Californians will have to start paying.

Brown's signature on the Amazon bill means the days of no online sales tax are numbered in California. It's a compromise that Amazon signed off on; the Seattle-based company will stop trying to overturn the state's previous online sales tax law through a referendum. In return, it will lobby Congress for a national online sales tax and open distribution centers that could lead to 10,000 jobs.

Brown says it's a win for the state budget and all retailers, online or not.

"First, they're going to bring thousands of jobs to California, hundreds of millions of dollars into the state coffers at a time we desperately need the money, and it's also leveling the playing field," said Brown.

"The sales tax issue must be resolved in Congress," said Amazon Vice President Paul Misener. "It's the appropriate place and it's the only way that California will be able to obtain all the sales tax revenue that is available to be collected."

If Congress fails to act, Amazon and other e-tailers will have to start collecting the sales tax on September 15th, 2012.

Online shoppers ABC30 spoke with had mixed feelings about it. On the one hand, people can't afford it in this economy.

"Of course, I mind paying the tax. That's my money," said Emily Coleman. "I'm wanting the product. I don't want to be paying taxes."

On the other hand, government needs to provide basic services.

"I personally don't mind it," said Diane Mokoro. "I understand the value of taxes, so I'm OK with it."

The new law is especially a relief for brick and mortar stores, like Palo Alto Bicycles, which couldn't compete with e-tailers based on the sales tax difference. Customers would come in, try the product and leave to buy the same thing online.

"What I can't counter is when the government gives one section of the economy a break and not me," said bicycle shop manager Jeff Selzer. "It was just unfair."

Next year is an election year. So it will be extremely difficult to get Congressional approval for any tax. So, for California, the online sales tax will likely take effect in a year.

Amazon is planning to reinstate the thousands of affiliates it fired this summer.


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