Feeds

Amazon settles sales tax spat with Governor Moonbeam

etailer drops ballots to get one year tax break

Boost IT visibility and business value

California governor Jerry Brown and Amazon have settled their long-running dispute over the state’s urge to charge the etailer sales tax.

In June Governor Brown, who is seeking to tackle California’s staggering debt problem, passed AB X1 28 - a bill to collect sales tax from online etailers like Amazon. The company vowed to fight the measure with a ballot initiative next year to kill the plan.

But the two sides have now reached a deal. Under the terms of the agreement the state has agreed to hold off on collecting sales taxes until September 15, 2012. This will leave open a window for the passing of a national law on the issue, which could be more favorable to Amazon (what with all the lobbyists in operation in Washington) and would remove the need for the company to negotiate with other states who could introduce their own laws.

In return Amazon has agreed to create 10,000 new full-time jobs in California, and employ another 25,000 seasonal workers by 2015. It has also agreed to drop its ballot measure to overturn the law, despite spending millions on it thus far. Amazon did not say if California workers would be subject to the same horrific conditions as some of its other staff.

“A prolonged, costly ballot battle is a benefit to no one,” said Brown in an official statement. “This landmark legislation not only levels the playing field between online retailers and California’s brick-and-mortar businesses, it will also 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. It’s time for Washington to follow our lead and forge a bipartisan national solution.”

Amazon and others have got away with paying little or no sales tax for online commerce thanks to Supreme Court rulings that companies should not have to pay sales tax in states where they have no physical presence. This essentially gave online vendors a built-in price advantage, and it’s something that they have lobbied hard to keep. Bricks and mortar retailers however have been pushing equally hard on the other side for the elimination of what, to them, is an unfair subsidy.

“Amazon's concession to finally begin collecting sales tax in California is a groundbreaking moment that sends a strong message to Washington that it is time to stop giving special treatment to a select few,” says a statement from the California Retailers Association president Bill Dombrowski. “All retailers deserve the chance to compete, grow and create jobs on a level playing field, without government picking winners and losers.”

The California government estimated that the lack of sales tax from Amazon was costing around $83m a year in lost revenue, and with the budget deficit currently running at around $10bn then every little helps. Other states will also be looking at the case and seeing if they too can get a similarly good deal for their constituents. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.