Gov. Jerry Brown signs Amazon sales tax collection law
Saying it would save existing jobs and create new ones, Gov. Jerry Brown signed into law legislation to require Amazon.com and many other out-of-state Internet retailers to collect sales taxes on purchases by California customers.
The new 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," Brown said Friday at a ceremony held at the San Francisco headquarters of clothier Gap Inc. The event was attended by the lawmakers, who sponsored the bill, and and retail industry executives.
Experts predicted that the new law would help bricks-and-mortar stores that have sales staffs compete with e-commerce companies that need fewer people to fill orders. They also predicted that new jobs would flow into the state if Amazon, as expected, opens some large distribution centers to better serve California, which is estimated to represent as much as 20% of the company's market.
Although the bill, AB 155 by Assemblyman Charles Calderon (D-Whittier), takes effect immediately, it doesn't require that sales taxes be collected from Californians until Sept. 15 of next year. The delay was part of a compromise put together by Amazon with representatives of national retailing chains, including Wal-Mart Stores Inc. and Target Corp., as well as local, independent store owners.
As part of the deal, Amazon agreed not to go forward with a planned referendum to ask voters to overturn an earlier sales tax collection law that took effect July 1.
Proponents of the bill argued that Seattle-based Amazon received an unfair competitive advantage over stores because many Internet buyers did not include sales tax on top of the purchase price of the goods.
California law requires consumers to pay a "use tax" that is equal to the sales tax if the merchant doesn't collect the levy for the state. However, tax collectors generally do not enforce that obligation on non-commercial transactions, and less than one-half of 1% of taxpayers voluntarily pay, state officials said.
"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," said the Retail Industry Leaders Assn., a trade group that has lobbied across the country for laws similar to California's, in a statement.
Paul Misener, Amazon's vice president for global public policy, said his firm plans to bring 10,000 new jobs to California and invest $500 million over the next few years.
Photo: An Amazon fulfillment center in Phoenix. Credit: Joshua Lott/Bloomberg