Californian Shoppers Will Pay Tax For Amazon Purchases

Amazon managed to “rage against the machine” for years now, but it looks like the free ride is about to end. As of Saturday, Californian shoppers will pay tax for Amazon purchases on check-out. However, thanks to a small tax loophole, numerous products remain tax-free.

Californian tax collectors have been greening at Amazon for years now. The company managed to keep its products tax-free until this fall. It was something that Sacramento tax collectors knew it will happen at some point in time. For the moment being, Californian residents shopping from Amazon will pay taxes on purchases at check out. But, thankfully not all products will be taxed.

For anybody living in California paying taxes is most likely almost a daily nuisance. It is the state with the highest sales tax rates in the country, topping the rest with almost 10 percent. Amazon sales in California meant last year a $150 million loss in tax revenue, money which the state legislators would claim schools and services could benefit from.

But California smaller retailers have been having a hard time trying to compete with Amazon. By 2015, is estimated to top the $100 billion annual revenue mark and many retailers believe things would be different if the company would comply with tax regulations all over the country.

So having Californian shoppers pay tax on Amazon purchases might well be an attempt to level out the market and rob Amazon of its competitive edge. “Amazon is so aggressive on so many fronts” said an owner of new and used books shop in the East Bay of San Francisco. “It’s hard to keep putting out fires everywhere. They sell e-books. They’re becoming publishers. And now they want to do same-day shipping. They’re an octopus” the owner told The New York Times.

Even if California’s tax collectors managed to get Amazon to add tax to some purchases, the company still enjoys a loophole. There are hundreds of thousands of items in the Amazon stores and warehouses that are tax-free. Orders marked with “fulfilled by Amazon” are tax-free. It amounts to one fifth to one quarter of all products Amazon offers.

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