AB155, also known as the Amazon tax bill, passed the Assembly this week and now awaits the state Senate's vote. If it becomes law, online retailers will have to collect sales tax from customers who make purchases via the Internet. As of now, only brick-and-mortar businesses are held accountable for the tax.
The new law means Amazon would have to collect those taxes on Kindle sales, since the electronic book is made right here in California. Obviously, Internet businesses aren't happy. They have long fought to push back this controversial bill, which would generate some $1.1 billion in revenue.
Now that this appears to be sailing through the Legislature, Amazon and other online companies, including Overstock.com, are threatening to leave the state. Moreover, Republicans, who vociferously oppose the bill, are worried about a flurry of lawsuits.
As Assemblyman Charles Calderon (D-Whittier), who authored the bill, told the Los Angeles Times: "If you oppose this bill, you support tax evasion and are antibusiness."
But Scott Hauge, president of Small Business California, says it's a matter of fairness. "Why should an Internet sale get a 9 to 10 percent pricing advantage over a brick-and-mortar?" he asks, referring to San Francisco's 9.5 percent sales tax.
What's best, he says, is that the bill would make it the seller's responsibility to report purchases -- not the buyer's.
Steve Cornell, who owns Brownies Hardware in Nob Hill, says he believes small and big businesses are ready to see this bill become state law.
"It's saying, hey, Internet people, do all the same things we're asking in-state people to do. Nothing more, nothing less," he says. "It's not just a bunch of small businesses crying. Companies like Macy's and Home Depot are all in favor of this particular legislation."