Approving a landmark legislative compromise that creates jobs and ensures that online retailers do not receive an unfair tax advantage over brick-and-mortar businesses, Governor Edmund G. Brown Jr. today signed a bill that requires Amazon and other internet retailers to collect sales taxes starting next year.
AB 155 (Calderon) paves the way for a nationwide solution by giving internet retailers time to push for passage of a federal bill that mirrors California's legislation.
"A prolonged, costly ballot battle is a benefit to no one," Governor Brown said. "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."
AB X1 28, passed by the legislature and signed by the Governor in June as part of the budget, affirmed that out-of-state online retailers like Amazon must collect sales tax. Today's compromise legislation delays those tax collection obligations to give online companies time to seek an alternative national solution. In exchange for the additional window of time the bill provides, Amazon has pledged to create at least 10,000 full-time jobs and hire 25,000 seasonal employees in California by the end of 2015. This will generate an estimated half billion dollars of capital investment in California. Amazon will also drop its referendum challenge to AB X1 28.
"Amazon is grateful for Governor Brown's support of this bill and enactment of federal legislation, and we look forward to creating thousands of jobs in California," said Paul Misener, Vice President of Global Public Policy for Amazon.
If Congress fails to act on nationwide legislation, online sales tax collection in California will begin September 15, 2012.
The Board of Equalization has estimated that California loses over $1 billion annually from uncollected use taxes. Their analysis also shows that California currently loses at least $83 million annually in uncollected state and local use tax attributed to Amazon's sales in California.
Today's compromise is supported by thousands of businesses, including Barnes & Noble Inc., Best Buy Inc., Crate & Barrel, Daniel's Jewelers, Gap Inc., The Home Depot Inc., J.C. Penney Company Inc., Lowe's Companies Inc., Safeway Inc., Sears Holding Corporation, Target Corporation, Wal-Mart Stores Inc., Westfield Group, and many other small and medium sized businesses across California.
"This is a major victory for brick-and-mortar businesses in this state. We thank Governor Jerry Brown and the leaders in the California State Legislature who have demonstrated their commitment to our businesses by passing and signing e-fairness into law," said California Retailers Association President and CEO Bill Dombrowski. "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. All retailers deserve the chance to compete, grow and create jobs on a level playing field, without government picking winners and losers."