California To See Increase Of Revenue Due To Sales Tax Law Placed On Internet Merchants
California residents are no longer able to take advantage of no sales tax when they shop online. After several years of controversy, Amazon will begin to collect both local and state taxes, which can range from 7.25 to 9.75 percent, depending where in the state you live.
The move is expected to generate nearly $100 million in the first year. And, as Internet shopping becomes more prevalent, money could rise into government coffers.
Amazon was quite popular for its low cutting of brick and mortar store prices. However, with the new sales tax in place, it will erase some of the price advantages it had. Plus, Amazon will also have distribution centers throughout the state to speed delivery to customers’ orders. Amazon will manufacture a network of warehouses, with the first two being built in Patterson and San Bernardino.
Consumers are split on this issue. Many who loved the idea of not paying taxes rushed to make some last minute tax-free purchases, trying to save themselves eight to nine percent in savings. Other consumers view the sales tax as only fair. One shopper said sales tax has to be paid at the store so why not online too. She said she doesn’t understand the argument against the sales tax and has no sympathy for those that do gripe about it.
California vs. Online Merchants
According to experts, California residents purchasing from Amazon amount to nearly half of all Internet purchases around the state. But, it’s not just Amazon feeling this new 2011 state law; any online merchant will begin collecting sales tax. Lawmakers said Amazon and other Internet shopping sites have deprived the state of California millions of dollars by not charging sales tax during the checkout phase.
Amazon claimed that under the 1992 U.S. Supreme Court ruling, states could not force businesses with no physical presence in the state to collect sales tax. State officials and Amazon have butted heads for years about the Internet sales tax issue. But, both have said they’re ready for the big change.
Board of Equalization chairman Jerome E. Horton said the agency is ready for the new law. He said the agency has plans to hire more than 30 new auditors, lawyers, collectors and additional personnel during the next three years. Horton said the staff will have a good idea which businesses will be responsible for collecting the state’s sales tax and the amount of money they’ll need to send to it. He said he’s happy that Amazon is going to play by the rules.
Scott Stanzel, Amazon spokesman, said the law is a win/win since it allows the company to expand while creating jobs for the state. He said the company provides the best prices, regardless of sales tax as well as quick delivery and an array of selections.
How the Amazon sales tax plays out against the brick and mortar store will soon be seen.
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this is why california is ranked 50th in the county in friendliness to business, partially why almost NOTHING is made in california anymore, and why I am leaving this state as soon as I can.
they collect property tax on so much expensive real estate here yet they gave to charge 9.22% state income tax and super high sales tax. God save us from this tax purgatory of california.
As soon as I can save up enough im outta here, Gibraltar here I come.