We understand why it is appealing for students to purchase their textbooks online. The ease of purchasing your textbooks for the quarter without having to wait in the long start- of- term lines at the bookstore is reason enough. But at what cost does the convenience of internet purchases come to California? The state has not only been denied deserved revenue from internet retailers, but has also seen the demise of local bookstores as a direct result of those retailers exploiting a legal loophole to avoid collecting sales tax from the consumers.
It is important to be clear; there is not now, nor has there ever been, a sales tax exemption for Internet sales. However, many Californians are unaware that online purchases are subject to the state’s sales tax. This lost revenue, which the state tax board estimates to be $1.1 billion annually, is critical, particularly in a time of dire budget deficits and draconian cuts to higher education and social safety net.
Out-of-state online merchants are able to underprice local stores and California-based online firms by as much as 10 percent, simply, by refusing to collect state sales tax and betting consumers will never pay the sales tax on their own. Unfortunately, so far they have been right; less than half of 1 percent of Californians paid the tax when they filed their income tax returns in 2010. Local bookstores, all of whom collect the sales tax and contribute to the overall health of our community in innumerable ways, have watched helplessly as their stores become mere showrooms for Amazon and other Internet tax evaders.
So what can we do about it?
First, consumers should support their local businesses. Instead of buying that new book from online retailers, visit your local bookstore. Healthy local businesses are vital to healthy communities. If you do purchase online, remember to keep your receipt and pay your sales tax when it is due.
Second, lawmakers need to give state tax officials clear direction to pursue any and all avenues to require out-of-state sellers to collect taxes owed, just as other states are doing, including Minnesota, Virginia, New York and Arkansas. I, along with Assemblywoman Nancy Skinner and Assemblyman Charles Calderon, have authored a package of bills designed to close the tax loophole and once again put in-state retailers on a level playing field with Amazon and other out-of-state competitors. It is important that Californians contact their legislators and tell them that it is time they stand with retailers, several regional chambers of commerce, and cities and counties by supporting bills such as the one I have proposed — SB 234.
Failure to compel online retailers to collect the sales tax gives preferential treatment to businesses that do not employ a single Californian or invest in our state, at the expense of local businesses that create jobs for CA workers and boost local economies.
