California Assembly OKs Bill To Tax Online Retailers

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(AP)

(AP)

SACRAMENTO (CBS/AP) — Online retailers such as Amazon would be required to collect California sales and use taxes under a bill approved by the state Assembly Tuesday, potentially boosting the state’s revenues by more than $1 billion a year if it becomes law.

Assemblyman Charles Calderon, D-Whittier, says his legislation evens the playing field for physical stores that operate in California and have been paying the sales tax already.

“We’re not imposing a new tax,” he said. “What we are suggesting is a way to collect a tax that goes uncollected.”

AB155 extends the statewide 8.25 percent sales tax rate to purchases made from online retailers that have a presence in the state, including those that work with sister companies with offices in California. Physical stores also must charge local taxes that can range as high as an additional 2.5 percent.

The measure passed 47-16 with the support of one GOP lawmaker and now heads to the Senate.

Other Republicans rejected the bill because they said it would invite lawsuits, drive business out of California, and get the state entangled in the messy task of regulating the Internet.

“This is just another tax grab,” said Assemblywoman Shannon Grove, R-Bakersfield.

Assemblyman Tim Donnelly, R-Twin Peaks, called the legislation “complete insanity,” arguing that it further discourages companies that already choose not to operate out of California directly.

But supporters said current law is unfair to businesses with storefronts, where shoppers will try out products before buying the online versions that are cheaper because they lack sales taxes.

Scores of businesses back AB155, including Wal-Mart, Best Buy and Home Depot.

“If you oppose this bill, you support tax evasion, and you’re anti-business,” Calderon said.

He expressed confidence that the proposed law would withstand a legal challenge, citing a 1994 state appeals court ruling in favor of a Colorado mail-order company. That case prevented the State Board of Equalization from collecting taxes from the company, despite its ties to a California company.

Calderon said his proposal would strengthen tax law by linking it to in-state companies that help retailers such as Amazon with research, sales and other services.

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services may have contributed to this report.)

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