California governor signs Amazon sales taxes into law

A new law in California could set a nationwide precedent for how Amazon deals with state taxes on purchases.
Written by Rachel King, Contributor

California consumers will have to become accustomed to paying for sales taxes on purchases from Amazon.com now that Governor Jerry Brown has signed a new bill into law regarding the controversial topic.

However, this doesn't necessarily mean that all California consumers will see higher shopping cart bills today. Although the bill is supposed to become effective immediately, merchants -- including Amazon -- are not required to collect sales taxes until September 15, 2012.

The topic has had strong arguments from both sides. From the Amazon point-of-view, not charging sales taxes offers a competitive edge on top of already bargain prices. In weak economy, this has proven especially enticing and helpful to consumers nationwide.

However, opponents to Amazon argued that it hurt small business owners who are required by law to pay sales taxes but sell the exact same products seen on the online megastore's website.

The Los Angeles Times reports:

Experts predicted that the new law would help bricks-and-mortar stores that have sales staffs compete with e-commerce companies that need fewer people to fill orders. They also predicted that new jobs would flow into the state if Amazon, as expected, opens some large distribution centers to better serve California, which is estimated to represent as much as 20% of the company's market.

Although consumers might not like the extra upfront charges at first, it does give other online vendors a more competitive chance. Amazon might take a hit at first when this goes widespread in California, the most populous state in the U.S., but it would likely be slight as Amazon is already well-known for budget-friendly prices, so don't feel too bad for them.

This also has the strong possibility to set a precedence for other states, so we could be seeing more online purchase/state tax collection debates for some time to come.

At least there's still free shipping for Amazon Prime members and purchases totaling over $25...for now.

Editorial standards