Just this Friday, Gov. Jerry Brown, signed legislation postponing new sales taxes rules that would oblige people who purchase online in California, which grants more time for conventional and online retailers to lobby Congress for a national standard on the high-stakes problem.
The bill, created as a compromise among Amazon.com, conventional retailers and California officials that searches for ways to raise revenue, postpones until at least September 2012 online tax rules, implemented as part of this year’s state budget package.
Under the negotiation, Amazon is going to drop a ballot referendum arranged for next year to abolish the law passed this summer previously, a move that guaranteed an ugly and expensive campaign conflict between online and traditional retailers.
If such effort fails, Amazon is going to collect sales tax from California customers. The budget bill signed earlier by Brown obliged more online retailers to gather the state sales tax which is going to take place on July 1. The move induced Amazon in cutting ties with some 25,000 affiliate businesses in California and paying out more than $5 million for gathering signatures for the ballot referendum.
The compromise bill is going to cost California an expected $200 million in tax revenue during the present fiscal year, but helps both sides avoid an expensive election contest and the odds of legal disputes. State taxing authorities’ asses that California lose at least $83 million a year in uncollected state and local use tax accredited to Amazon’s sales.
Under the deal, the retailing giant is going to renew partnership with its California affiliates and has assured to create at least 10,000 full-time jobs and hire 25,000 recurring employees in the state by the end of 2015.
At the bill signing, Amazon’s vice president of global public policy, Paul Misener, believes that the company would bring $500 million in venture to California over the next several years, largely in the form of massive allocation centers.
Misener admired the spirit of compromise he said has led to the deal and said he was hopeful that federal lawmakers could also find a way to collaborate with each other, despite partisan gridlock.
When Brown asked, got asked about his expectation on the persuasion of the Congress to unite around a new tax policy in an election year. Brown cited that they have not got any answer to the problem. They are still looking for the answer.
According to the state law consumers compelled to compensate for sales tax whenever they order something online, but the tax is too hard to impose as most customers seldom pay.