Gov. Jerry Brown today signed legislation that requires Amazon.com and online retailers to collect a sales tax beginning next year.
The governor signed the bill at Gap Inc. headquarters in San Francisco -- one of many California brick-and-mortar retailers and manufacturers that supported the bill, AB 155, which was sponsored by Assemblyman Charles Calderon, D-Whittier.
The bill paves the way for a nationwide solution by giving internet retailers time to push for a federal bill that mirrors California's legislation, the governor's office said in announcing the signing.
The bill is expected to boost job creation, with proponents saying it could preserve jobs by establishing a "level playing field" between Internet retailers and retailers with an actual physical presence, such as Gap, Target Corp. and others.
“This landmark legislation not only levels the playing field between online retailers and California’s brick-and-mortar businesses, it will also create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years," Gov. Brown said. "It’s time for Washington to follow our lead and forge a bipartisan national solution.”
AB X1 28, passed by the legislature and signed by the Governor in June as part of the budget, affirmed that out-of-state online retailers like Amazon must collect sales tax. Today’s compromise legislation delays those tax collection obligations to give online companies time to seek an alternative national solution.
In exchange for the additional window of time the bill provides, Amazon has pledged to create at least 10,000 full-time jobs and hire 25,000 seasonal employees in California by the end of 2015. This will generate an estimated half billion dollars of capital investment in California. Amazon will also drop its referendum challenge to AB X1 28.
If Congress fails to act on nationwide legislation, online sales tax collection in California will begin Sept. 15, 2012.
The Board of Equalization has estimated that California loses over $1 billion annually from uncollected use taxes. Their analysis also shows that California currently loses at least $83 million annually in uncollected state and local use tax attributed to Amazon’s sales in California.
The bill was supported by numerous businesses, including Barnes & Noble Inc., Best Buy Inc., Crate & Barrel, Daniel’s Jewelers, Gap Inc., The Home Depot Inc., J.C. Penney Company Inc., Lowe's Companies Inc., Safeway Inc., Sears Holding Corporation, Target Corporation, Wal-Mart Stores Inc., Westfield Group, and many other small and medium sized businesses across California.