Thursday, June 2, 2011

California state assembly passes bill to tax online retailers

The California State Assembly approved a measure (AB155 ) on Tuesday that would collect taxes from online retailers. Other states have passed similar measures, known as "Amazon laws" after the online retail giant that's at the center of the e-commerce controversy. California would be the biggest, however, and would stand to reap over one billion dollars annually in new tax revenue.

The Internet has long been the go-to place for small appliances, according to our annual "Where to Buy Appliances" survey. But more consumers are now purchasing major appliances online as well. For example, 8.7 percent of people who bought a refrigerator in 2010 did so on the Internet, up from 2.2 percent in 2003, according to Synovate, a market-research company. (If you go this route, we strongly recommend you visit a brick-and-mortar showroom first to see how the fit, finish, and features of possible models compare in real life).

As more big-ticket appliances are sold on the Internet, the stakes in online sales tax will only increase. During a visit last month to Consumer Reports' headquarters, Amazon founder and CEO Jeff Bezos argued that federal legislation is needed to rectify the issue. "Our point-of-view on this is that we should simplify the sales tax system, and we’ve been insisting on this for 10 years," he said. "We support the streamlined sales tax initiative, and 22 states have signed on. The right way to fix this is with federal legislation."

For now, California is moving forward with its measure, albeit with stiff opposition from Republicans, who say the bill will hurt business and push the state into the murky business of Internet regulation.

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