Amazon Shells Out $3 Million to Fight Online Sales Tax
August 5th, 2011
Amazon.com is willing to spend big bucks to avoid collecting sales tax on Internet purchases in California.
In a filing Friday with the Secretary of State, the company revealed it had already contributed $3 million to the More Jobs Not Taxes Committee, which was established less than a month after a state law taxing online purchases took effect.
The committee bills itself as a "growing coalition of taxpayer groups, consumers, small businesses, and online companies," but so far it has only one funder: Amazon.
The company's contribution will go toward gathering signatures to put an initiative repealing the tax on the June 2012 ballot, committee spokesman Ned Wigglesworth said. The committee must submit 504,760 valid signatures to the Secretary of State by Sept. 27.
In the five weeks since Gov. Jerry Brown signed the new law, Amazon has moved quickly to have it overturned. Political analysts say the electoral battle could ultimately cost tens of millions of dollars.
Who will lead the fight against Amazon and for the tax is still unclear, but a group called the Alliance for Main Street Fairness has staked out opposing territory with the maxim, "a sale is a sale is a sale." On its website, the Alliance describes itself as an organization dedicated to educating people about the need to "level the playing field for both small businesses and online-only retailers." It says it is "funded by and advocates on behalf of employers who believe there must be a fair and balanced approach concerning the sales tax collection system."
Under California law, online purchases are already subject to sales tax. But until June, online retailers without physical stores in the state did not have to collect those taxes. Despite heavy lobbying from Amazon, the state Legislature passed the law to help the state collect more money without raising taxes. Legislative analysts estimate the measure will generate $195 million a year in revenue for the state and another $122 million for local governments.
The State Board of Equalization voted last week to begin implementing the law, but also asked the state attorney general for a legal opinion on whether it could collect the tax if Amazon's initiative were to be certified for the ballot.
Early polling suggests a vote would be close. A Los Angeles Times-USC poll released last month found 46 percent of voters favoring an online sales tax, with 49 percent opposed.
In the past, according to The Field Poll's Mark DiCamillo, taxes on Internet shopping have polled lower than hypothetical income tax increases for millionaires and sales taxes on cigarettes, alcohol and pornography. (On the other hand, online sales taxes poll higher than raising gasoline or property taxes).
Evan Westrup, a spokesman for Gov. Jerry Brown, predicted California voters would reject Amazon's measure.
"When voters are given the option of carving out a massive, multimillion-dollar tax loophole for a corporate giant versus funding core services that are continuing to be cut in our communities, I think the choice becomes quite clear," he said.
But Robert Stern, president of the Center for Governmental Studies, a nonpartisan think tank in Los Angeles, said Amazon will have a better chance of success than Pacific Gas and Electric Company and Mercury Insurance, who saw their attempts to change the state's consumer law through the initiative process fail last year.
Stern added that Amazon would have a technical advantage on Election Day.
Because the company is seeking a referendum on a law passed by the Legislature, Stern said, voters who agree with the tax will be asked to vote "yes," while opponents of the tax will be asked to vote "no."
"It's always easier to get undecided and confused voters to vote against something," Stern said. "That's a tremendous advantage."