California is known for its natural beauty, Hollywood culture and the counter-culture movement of the 1960s, among other things. Unfortunately, it is also known for its dysfunctional politics. California is constantly facing budget cuts that impact social services, particularly higher education. Many complain that taxes are already too high, meaning that even extending previous tax increases is all but impossible. Revenue must be found but is hard to come by.
In recent years, online retail shopping has increased throughout the state and is only expected to continue its rise as the market becomes increasingly globalized. Retailers, particularly Amazon, have long avoided collecting California’s sales tax, along with local taxes, by using a business model that has consumers pay those taxes while filing income taxes. As a result, the taxes have been inconsistently collected and unfairly distributed. Some citizens pay, some do not and some are penalized for their lack of payment. In the name of fairness, this practice must end. The importance of this is compounded by the dire state of California’s budget.
The underlying principle is that everyone should be affected by sales tax equally. In June, Assembly Bill 28X was signed into law, calling for online retailers such as Amazon to collect taxes at the time of purchase. Since then, Amazon has led the repeal effort — one that, if successful, will deny citizens services such as public higher education. This bill does not create a new tax on consumers but mandates the collection of a tax that should have always been paid.
Amazon’s refusal to collect sales tax not only denies the state much-needed revenue but also creates an artificial advantage for Amazon over its competitors (both online and in-person) who do collect sales tax. Such an advantage removes money from local economies and further stifles the slow recovery in California.
While low prices are convenient, dwindling state funds for major institutions like the University of California and the California State University mean that revenue is needed now more than ever. The state cannot afford for this law to be repealed. Amazon should do the right thing and begin collecting taxes at the time of purchase, for the good of all of California.