As the President of the California Retailers Association, I represent businesses with more than 9,000 stores throughout California. These stores provide thousands of jobs, billions in revenue and countless products for the people of California.
That’s why we support e-fairness legislation, such as AB 153 (Skinner) and AB 155 (Calderon). Right now, retail businesses that have e-commerce sites are required to collect sales taxes. So if any one of our stores also sells its products at a physical store or online, they collect sales taxes, no exceptions.
But out-of-state, online-only retail companies like Amazon and Overstock don’t play by these rules. A loophole in the law has helped them avoid collecting and remitting these sales taxes. This gives them an unfair and artificial competitive advantage of nearly 10 percent over California retailers who operate e-commerce sites in addition to their brick-and-mortar stores.
That’s the issue that e-fairness legislation corrects: it requires every store to collect the taxes owed at the point of purchase whether the store is located in California or has nexus via an online presence in the state. Unfortunately, Amazon and Overstock have recently made attempts to bully Californians by threatening to end their relationships with their affiliates. This threat is just that and we need legislators to do the right thing and support California businesses.
Amazon claims that terminating its relationships with affiliates in California will cost the state jobs. In reality, e-fairness legislation like AB 153 and AB 155 will save and create jobs. Under the status quo, thousands of jobs are lost in this state due to online sales with out-of-state vendors who enjoy an advantage that is unfair. By creating a level playing field, those sales will be conducted in California and therefore create more jobs and more economic growth, not to mention save retail jobs that are being threatened or currently lost.
The reality is that major retailers operating in this state have relationships with thousands of California affiliates. If Amazon actually does sever their relationships with California affiliates, companies like Barnes & Noble, Walmart, Best Buy, Target, Sears, among others have all stated that they welcome Amazon and Overstock’s affiliates, and have let them know that they will still have a home.
Amazon also suggests that the status quo does not harm the economy. But the facts tell a different story. California is losing thousands of jobs and billions of dollars in economic activity. In 2010 alone, California lost over 18,000 jobs and retail businesses lost $4.1 billion in sales and that created a loss of $7.2 billion in economic activity as a result of the state’s outdated e-commerce laws.
The state’s current law is the real job-killer. Just recently, Borders filed for bankruptcy, closing stores and leaving hundreds out of work. Other retailers big and small have also felt an impact to their business. This, in part, is due to the state’s current law that picks winners and losers by giving out-of-state, online-only retailers, like Amazon, a nearly 10 percent advantage over California businesses.
Finally, Amazon wants people to believe that e-fairness represents a new tax. What e-fairness represents is the equal enforcement of the law meaning every retailer collects the sales tax, not just California businesses. Purchases made over the Internet are not tax free. When Amazon doesn’t collect the tax on an online sale, the tax is still owed. The burden then falls to consumers to track and remit that tax when filing their personal, state income tax.
Now the State Board of Equalization has sent out tens of thousands of notices to small businesses requiring them to find their receipts and fill out new forms to remit taxes on purchases they may have made on Amazon or Overstock. This adds another burden to small businesses on top of the 10 percent unfair advantage all to the benefit of out-of-state, online-only, mega retailers.
So what Amazon and Overstock are truly arguing for is that their consumers should have to collect receipts and add up purchases to compute additional sales tax liability every year or be in violation of the law. Amazon and Overstock would rather put the burden on its consumers than take responsibility themselves, which brick-and-mortar stores do every day by collecting at the point of purchase whether it’s at the storefront and online.
At the California Retailers Association, we welcome the role of online-only vendors in our state. But we insist that everyone must play by the same set of rules. Amazon and Overstock.com are no different than any other retailer. And they should not be allowed to skirt the rules and hurt California employers. A sale is a sale is a sale regardless of where it takes place.
For California to prosper and for our economy to grow, we ask legislators to stand with California businesses and support AB 153 and AB 155. All retailers can and must compete by the same set of rules or we will lose more jobs and revenue.