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California Residents to Pay Sales Tax on Amazon Purchases

Starting this Saturday, online retailer Amazon will collect sales tax from California residents. What does that mean for you? An additional 8.75 percent per item purchased.

For almost 20 years, Amazon and the California consumer enjoyed a tax-free relationship – if not technically, then practically. Though California residents have been legally required to remit their use-taxes directly to the state on online purchases, few have done so. Instead, many consumers chose to view the lack of sales tax as an online discount.

Now things will no longer be on the “honor system.” The retail giant will collect the sales tax up front. This is the result of an agreement reached between state lawmakers and some online retailers.

While the increased price for online purchases makes traditional brick-and-mortar store prices more competitive, Amazon will also get something out of the deal. Amazon plans to open some California-based on-the-ground operations of its own, to ensure faster fulfillment.  According to the SF Gate, a fulfillment center is planned for old Norton Air Force Base in San Bernardino.

Small retailers seem to think the idea, as they struggle to pay for things like rent and insurance.

Says Lori Webster of Altadena’s Webster’s Fine Stationers, the fact that Amazon will now collect sales tax “evens out the playing field.”

"I say 'Yay!' It's good for the economy, plus it's the right thing to do," Webster said.

Kay Camphuis September 12, 2012 at 10:02 PM
Californians who enjoy our beautiful state and all its wonders should be happy to pay sales tax. Has anyone ever wondered how much individual taxes would go down if everyone paid the taxes they owed at every level? Tax payers subsidize tax evaders.

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