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Coalition Calls for Californians to Boycott Amazon Over Sales Tax Issue; Loni Hancock Statement

| August 15, 2011
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In what could be a test of your principles versus your ability to buy Season Four of “Mad Men” at a really low price, a coalition of anti-poverty groups is calling for Californians to boycott Amazon.com over the online sales tax issue.

Here’s the group’s web site, ThinkBeforeYouClickCA.org, which includes a petition letter to Amazon that ends with:

“If Amazon.com is unwilling to abide by the same laws as everyone else and contribute to the collective well-being of our state, then I have no choice but to close my account and end my contributions to Amazon.com.”

As a reason for the boycott, the group cites Amazon’s non-compliance with the new law mandating that out-of-state online retailers collect sales tax on merchandise they sell.

Such transactions have previously been exempt because of a Supreme Court decision ruling that states cannot require companies without a physical presence in-state to collect sales tax, even if the company conducts business in that state.

California tried to circumvent that prohibition by expanding the definition of what constitutes an in-state presence. The new law stipulates that a presence is established if sellers own a subsidiary in the state, or by a relationship with “affiliates,” web sites that refer buyers to the retailer’s site.

Amazon immediately responded to the law by severing ties with its California affiliates. Then, a couple of weeks later, it filed a formal request for a referendum to overturn the law. The company needs to submit about 504,000 signatures by mid-October in order for it to qualify.

Amazon has said it will not collect the sales tax because it’s unconstitutional, among other reasons.

KQED’s Joshua Johnson today talked to East Bay State Sen. Loni Hancock, who co-authored the bill and is supporting the boycott. Here’s what she had to say; an edited transcript follows the audio clip.

State Sen. Loni Hancock calls for Californians to boycott Amazon.com

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

The legislation passed this spring is incredibly important. It creates a level playing field for California-based businesses because it requires out-of -state online retailers to collect and pay the same sales tax that all our local companies and communities do.

Right now there are a lot of angry Californians because Amazon, a multi-billion dollar corporation, refuses to comply with the law and is trying to take advantage of California’s initiative and referendum process to repeal the bill that was just passed and signed by the governor at a time when we need to have our local businesses survive and thrive and not be undercut by big out of state corporations, and at a time when the state needs all the revenue that is owed us because we’re talking about children’s education, our libraries, our parks, our roads, the things that the sales tax is used to buy for Californians.

A large coalition of people has come together just as they did around the attempt by Texas oil companies to repeal California’s clean air laws last year, and are saying just say no to this….

Maybe so. But a poll conducted last month found support for the tax of 46%, with 49% opposing it.

We have a request out to Amazon now for comment.

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Category: Economy, Tech

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  • harold

    I’m curious if anyone has proposed an alternate to the current “honor system” of self-reporting online-spending tax obligations.

    If the states were to improve the system without compelling out-of-state merchants to collect tax, how would they do it?

    Is anyone even trying to approach the problem from the other side? Seems like it might be worth some thought.

    • Jon Brooks

      We asked Betty Yee, a member of the Board of Equalization, about this when the law passed. She said the use tax is unenforceable, that they have tried public information campaigns, etc. But I did wonder at the time if more people would pay it if, for instance, if there were some penalties…

  • Sarah

    I mean this in the nicest way possible, but as someone who lives in California and frequently shops on Amazon I don’t want them to charge sales tax. It’s one of the perks of shopping online, and I’m thrilled they are fighting the state of California by leaving. I like the savings I see as a consumer. The state of California takes plenty of my income in taxes already, let me shop for cheap DVDs in peace.

    • Catherine Poloynis

      I agree…leave Amazon alone. Californian bureaucrats should be more inventive about how to build business in California instead of trying to stick their hands into Amazon’s pockets.