Amazon Cuts Calif. Deal—Now It’s Fighting For Online Sales Taxes
Written by Frank HayesSeptember 8th, 2011
Amazon has cut a deal with California politicians to block the state's online sales-tax law for at least a year. The political deal, reached Wednesday (Sept. 7), buys Amazon and other online retailers a year's respite from the online tax in California. But it also effectively guarantees that, one way or another, E-tailers will be collecting state sales tax 16 months from now.
The deal also effectively signals an end to a string of political and court battles in New York, Illinois, Connecticut, Rhode Island, North Carolina, Arkansas and Colorado. Amazon—which California calculated would be responsible for delivering half the online sales taxes the state expects to collect—is now in a race to get Congress to authorize online sales taxes. And unless the rest of the pure-play E-tailers decide to fight it, Amazon will drag them all along in its slipstream.
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2 Comments | Read Amazon Cuts Calif. Deal—Now It’s Fighting For Online Sales Taxes
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-Christine
September 12th, 2011 at 10:49 am
Up to now, not having to pay sales tax has helped offset the cost of shipping. Greedy local merchants say they want a level playing field. Having to pay shipping and sales tax tips the scale in favor of the locals, just as they schemed. Of course the greed of local taxing authorities can never be slaked. Is this a great country or what!
September 12th, 2011 at 10:58 am
There is the definite possibility that this tax deal could have huge implications across retail. First, this deal was inevitable. Amazon has always known that it’s Get-Out-Of_Having-To-Collect-Sales-Tax card was ultimately going to have to be returned. The issue was that for every month Amazon could delay that situation was a lot more profits in the bank. The difference now is that everyone now knows the latest this situation will end.
But to your point, for the in-store retailers that plan for it, this could be huge. When the tax rules hit Amazon, tons of their customers will feel like they just saw a sharp price increase for the identical product/service. If retailers market that fact, they may find themselves able to pull back a lot of sales.
Reality is that online will still be cheaper, but this gives marketers something to play with.