It’s only fair all businesses compete with the same set of rules, so it’s good news Amazon.com will soon face nearly the same sales tax burden as Texas’ online and brick-and-mortar retailers — even though consumers probably won’t like picking up the tab.
Texans who’ve grown accustomed to saving on sales taxes by shopping online at Amazon.com will see a 6.25 percent hike in their e-bill beginning next month. While consumers likely won’t applaud the change, it defuses a battle that saw the Internet retailer shut down its Texas warehouse and put the state’s demand for payment of $269 million in unpaid sales taxes in court.
In October, State Comptroller Susan Combs sent a $269 million bill to Amazon.com for what the comptroller’s office said were uncollected sales taxes along with penalties and interest on sales from December 2005 to December 2009. The demand was based on Texas’ contention the Seattle-based company’s Texas warehouse obligated it to collect taxes on sales made to Texas residents.
The company disagreed.
But in April, Ms. Combs and Amazon officials announced they’d come to an agreement to resolve the dispute. Amazon agreed to bring 2,500 jobs and $200 million in capital investments to the state, along with collecting 6.25 percent sales tax on purchases made by Texas consumers. In exchange, the state dropped its $269 million demand.
“This is an important step in leveling the playing field in Texas,” Ms. Combs said in a statement at the time. “However, Congress should enact federal legislation that will give states access to revenues that are already due, which would resolve this issue fairly for all retailers and all states.”
The deal doesn’t put Amazon in the same position as local retailers, who tack sales tax of 8.25 percent onto purchases. The state levies a 6.25 percent rate, and the remainder goes to local government. Amazon will collect only the state’s levy.
But it’s still better than nothing. Estimates are $600 million a year would be added to state revenue if sales taxes were collected on all purchases Texans made with online retailers.
The Texas-Amazon deal is not unique. As online sales have grown, states have looked for ways to apply the same sales tax rules to them that apply to traditional businesses. Many, like Texas, had laws on the books requiring residents to report purchases on which state sales tax was not collected and remit the appropriate amount to the state — but few people did so and enforcing the law was impossible.
This year has seen Amazon cut deals with Texas and New Jersey to collect sales taxes, and it’s likely others will follow.
We sympathize with those who lament the apparent end of tax-free online shopping, but it’s not like it could continue without end. Since Texas funds a chunk of state government with sales tax revenue, officials were ultimately going to have to raise the rate to maintain the revenue stream or find a way to collect on the growing volume of untaxed online transactions.
Either way, Texas consumers would pick up the tab. With this deal, Amazon is on basically the same footing as other Texas businesses — and that’s the sort of equality under the law upon which this country was founded.
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A Republican state official has threatened to run off a thriving business but manages to increase the burden on the citizens of Texas with her settlement. Amazon should have shut down the warehouse, fired all it's employees and told Ms. Combs to fly a kite!
When a government employee thinks she/he knows best how to run private business, I encourage her to leave government service and run her own operation in the private sector!
taxes
if the government can't find a way to tax it, they don't want it.
taxes
if the government can't find a way to tax it, they don't want it.
TAXES! In Texas? Noooooo!
Unbelievable. Texas politicians throwing out a business because of taxes when they swear aloud: NO MORE TAXES!!! Surely they gest! Unbelievable. Texas politicians throwing out a business because of taxes when they swear aloud: NO MORE TAXES!!! Surely they jest! Its election time and now they're muckin up their messages, again, but worse, now trying to control Texans' rights to shop where they want to, and buy from businesses of their choice. We'll pay taxes to help one another, and make our communities safe.
Amazon serves our seniors who cannot get out because there is so little access in Texas for them that is convenient, affordable, and safe; even handicap parking is rationed so there are few close to the stores front doors, if any at all. It serves the disabled, and those confined home due to illness, distance, and age. Believe it or not, in spite of the State Health Department's concept of humans, they do need to buy, replenish, maintain their residences, and survive on a minute to minute basis and for many without a company like Amazon to deal with life would be far more difficult that it is even now for many Texas residents.
If more local companies would provide honest, dependable, ethical and economical service that would be different but to enter a grocery store, mall, or the big box stores here we have to fight to remain stable, take care not to trip over sales and market displays in aisles, choke on smokers outside the entries, lack of help much less prices on products. For the weary, aged, and disabled, no electric carts, then spend hours trying to find a restroom. Then if shoppers survive, wait in long lines to even have the honor of paying for our purchases that are increasing about 35% in cost this past year. When products are defective, or ‘spoiled’ or not what labels state it’s impossible to return anything without blood, sweat and tears. At some point the consumer is saying BASTA! Onward Amazon!