Two local legislators joined advocacy groups in Sacramento Monday to boycott Amazon due to the company’s effort to overturn a law requiring online retailers to collect state and local sales tax from their customers.
State Senator Loni Hancock, D-Berkeley, and state Assemblymember Nancy Skinner, D-Berkeley, teamed up with state advocacy groups who claim that Amazon and some other online companies have refused to collect these taxes from their customers, which could result in $200 million to $500 million in lost state tax revenue this year.
These funds could be used to help address the state budget crisis, rather than cutting social services and increasing public university fees, Skinner said.
“Up and down California, the majority of businesses pay sales tax, but it is Amazon that wants a different business model,” Skinner said. “(Amazon) refuses to pay this sales tax, and this is creating an unfair competitive advantage.”
Representatives from Amazon could not be reached for comment as of press time.
Jean Ross, executive director of the non-partisan California Budget Project, said that the company’s refusal to collect sales tax could also indirectly result in increased student fees.
“Every time a student buys a textbook from Amazon, Amazon’s not sending that tax to the state, which results in the rising student fees,” Ross said.
Ross added that even if Amazon does not collect these taxes, consumers must still pay this tax to the state.
“The key point for people to understand is that regardless of what Amazon decides to do in California, California consumers still owe that money to the state,” Ross said. “It is not a new tax — it is a new way of collecting a tax that (consumers) always owed.”
Ross said that typically, non-online businesses collect sales tax from their consumers, but before AB 28X was signed into law in June, Amazon employed a business model that did not require them to collect tax from their consumers.
“When you buy from Amazon, they … will admit that the consumer will need to send it to the state,” Ross said. “They have built a business model on the assumption that most consumers won’t pay their user tax when they file their income tax.”
This advantage unfairly shifts consumers toward Amazon and away from local businesses, said Robert Blanco, a legislative aide to Hancock.
“What is happening up and down California is that businesses that pay state taxes are just becoming show rooms for Amazon,” Blanco said. “For example, (consumers) try all these different cameras at their local store and go home to just order it online.”
However, Ned Wigglesworth, a spokesperson for More Jobs Not Taxes, said the political committee is currently trying to collect more than 500,000 signatures by Sept. 27 for a ballot initiative to allow voters to approve or reject the law on the June 2012 ballot.
“The reasons that we are opposed to this new law is it hurts consumers, it hurts small businesses, it destroys jobs, when we need them for economic recovery,” Wigglesworth said.
But Nancy Berlin, the executive director of California Partnership — an advocacy group that was present at the boycott — said that this tax revenue could be used to fund needed social services such as day care centers and vision services.
“I know that $200 million is not a huge number in the state budget, but it is significant,” Berlin said. “Adult day care centers that have been closed, children who are losing vision care — we are talking about families who are losing basic benefits. The least we can do is collect this revenue that we should already be collecting.”