The Puget Sound Business Journal reports that Amazon.com, which has been largely successful at staving off attempts by various states to impose a sales tax on the products it sells and ships to those locations, is likely to face renewed pressure on the sales tax front this year as more and more states face severe budget crises.
According to the story, “For Amazon, the stakes are high. The company has had notable success growing its e-commerce business in a tough economy, and its shares have reached several all-time highs. By not collecting sales tax in most states, the company has a competitive advantage over brick-and-mortar rivals. Amazon is keen to hold onto that advantage as it engages in price wars with other retailers across a slew of product categories.
“If key states, including populous California, succeed in forcing Amazon to collect sales tax, the company will have to work harder to hold onto bargain-hunting shoppers and their wallets. Such a move may also spur Amazon to intensify its push for national legislation creating a simpler and more uniform system for online sales tax collection across all 50 states.”
According to the story, “For Amazon, the stakes are high. The company has had notable success growing its e-commerce business in a tough economy, and its shares have reached several all-time highs. By not collecting sales tax in most states, the company has a competitive advantage over brick-and-mortar rivals. Amazon is keen to hold onto that advantage as it engages in price wars with other retailers across a slew of product categories.
“If key states, including populous California, succeed in forcing Amazon to collect sales tax, the company will have to work harder to hold onto bargain-hunting shoppers and their wallets. Such a move may also spur Amazon to intensify its push for national legislation creating a simpler and more uniform system for online sales tax collection across all 50 states.”
- KC's View:
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While collecting sales taxes won’t be a good thing for Amazon, I would suggest that much of its appeal lies not just in low prices, but in its ability to create a community of consumers that in part define themselves by how much and where they shop online.
