Calif. Assembly Approves Bill To Tax Online Retailers

SACRAMENTO, Calif. (AP) -- The state of California could collect more than $1 billion a year by taxing Amazon and other online retailers if a bill approved by the state Assembly on Tuesday becomes law.

Assemblyman Charles Calderon, D-Whittier, says his legislation evens the playing field for physical stores that operate in California and have been paying the sales tax already.

"We're not imposing a new tax," he said. "What we are suggesting is a way to collect a tax that goes uncollected."

AB155 extends the statewide 8.25 percent sales tax rate to purchases made from online retailers that have a presence in the state, including those that work with sister companies with offices in California. Physical stores also must charge local taxes that can range as high as an additional 2.5 percent.

The measure passed 47-16 with the support of one GOP lawmaker and now heads to the Senate.

Other Republicans rejected the bill because they said it would invite lawsuits, drive business out of California, and get the state entangled in the messy task of regulating the Internet.

"This is just another tax grab," said Assemblywoman Shannon Grove, R-Bakersfield.

Assemblyman Tim Donnelly, R-Twin Peaks, called the legislation "complete insanity," arguing that it further discourages companies that already choose not to operate out of California directly.

But supporters said current law is unfair to businesses with storefronts, where shoppers will try out products before buying the online versions that are cheaper because they lack sales taxes.

Scores of businesses back AB155, including Wal-Mart, Best Buy and Home Depot.

"If you oppose this bill, you support tax evasion, and you're anti-business," Calderon said.

(Copyright 2011 by The Associated Press. All Rights Reserved.)