The Los Angeles Times reported that Amazon.com will continue to fight against a California law passed July 1, which requires the company to collect a 7.25% sales tax. Amazon said that the law is unconstitutional, and has now announced that it will make the case against the sales tax to voters, in hopes that they will vote to overturn it. According to the Times, Amazon’s approach of appealing to the voters directly will likely be less costly and more effective than filing suit to block the law.
The new law requires all retailers with affiliates in California to collect the state sales tax, whereas before, the tax was only applied to Internet retailers that had “a significant physical presence,” the Times reported. In order to avoid collecting the tax, Amazon has cut off its affiliation with 10,000 small businesses whose websites link consumers to Amazon.
The main opposition to Amazon’s refusal to collect the tax, the LA Times said, comes from California merchants who believe that retailers operating solely on the Internet will gain an unfair advantage by avoiding collection of the sales tax. Target, Sears, Wal-Mart and Best Buy are among the many major retailers against which Amazon would have to fight in order to continue to avoid collecting the California sales tax. Additionally, the Times said, those in favor of collecting more taxes in order to fund health, social services and welfare will also likely vote against overturning sales tax collection.
The Times quoted Kathryn Gallagher, spokeswoman of Home Depot, who said: “We believe Amazon should collect sales tax because it levels the playing ground for all retailers, small and large.”
However, the Times said, though the odds are slightly against Amazon prevailing, the company does have a large base of customers likely to vote in favor of overturning the sales tax law. The Times also quoted George Runner, a member of the California Board of Equalization, who said: “Californians are losing jobs and income as a result of the so-called Amazon tax,” and added, “It should come as no surprise that impacted California business owners would seek its repeal.”