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Amazon May Pocket Some of California’s Sales Tax

Two cities want to give online retailer tax rebates.

While the ink dries on a deal between Amazon and California regarding online sales tax and business growth, officials in two cities are considering giving back more than half the tax money generated from the retail giant.

Amazon came to an agreement with the state to begin collecting online sales tax on purchases starting in the fall and to set up distribution centers in San Bernadino and Patterson.

Luis I. Molina, mayor of Patterson, says the employment opportunities Amazon is providing his city will help so much that he wants to reward the company by giving it a tax rebate, or refund, of part of the tax income generated.

“This is monumental, not only for the city, but for the county and the region,” Molina tells reporters. “We’re up to 20 percent unemployment, and this is going to make a dent.”

San Bernadino and Patterson are each expected to bring in about $8 million in sales tax a year because of Amazon sales, according to news reports. Rod Butler, Patterson’s city manager, says 25 percent of that number is all his city needs, giving Amazon a potential of getting a 75-percent refund from his city.

A spokesman for San Bernadino indicated Amazon could get as much as an 80-percent refund from San Bernadino for the first few years.

Critics say this deal could cause other online merchants to expect similar benefits and could take away funding that should go toward public maintenance.

“The tax is supposed to be supporting government,” says Lenny Goldberg, executive director of the California Tax Reform Association. “Instead, it’s going back into Amazon’s pocket.”

In response, some legislators in California are seeking to ban the use of sales tax rebates, according to news reports.

About the author

Sarah Brown
Sarah Brown is a freelance writer who writes about e-commerce and small businesses. She recently graduated from Chico State with a journalism degree and is also a budding online entrepreneur, having launched two Web businesses and her own line of handmade products. Opinions expressed here may not be shared by The Online Seller and/or its principals.

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