Broad Coalition Works for E-Fairness in California ... and Other E-Fairness Updates

Over the past few weeks, a broad and diverse coalition has come together to help move e-fairness legislation forward in California. The wide-ranging coalition includes the American Booksellers Association, the Northern California Independent Booksellers Association, the Southern California Independent Booksellers Association, the Christian Booksellers Association (CBA), and the California Retailers Association, as well as large retail businesses such as Barnes & Noble and Wal-Mart. These groups and businesses are urging Gov. Arnold Schwarzenegger to support an e-fairness provision that has been added to the proposed legislative budget.

"The fact that a broad coalition of retailers and associations has come together for e-fairness makes very clear how important sales tax equity is for the economic health of retail businesses, both large and small," said Oren Teicher, ABA CEO. "The participation of these retailers and organizations has made a critical difference in California and has helped to cut through the cloud of misinformation from opponents of the provision. Lawmakers now understand the importance of passing e-fairness."

Teicher stressed that, despite the growing coalition, it is crucial that booksellers continue to write the governor to stress the need for sales tax equity. While Gov. Schwarzenegger has yet to comment publicly on the bill in recent weeks, he did veto this e-fairness legislation last year. "If we get enough support from retailers in the state, hopefully, we will convince the governor to support California businesses by passing this important legislation," Teicher said.

At a recent emergency budget session in Sacramento, a provision was added to the proposed legislative budget that would clarify state law to ensure that non-California merchants with online affiliates in the state acting as sales agents on their behalf collect sales tax on purchases shipped to California. The State Senate has already approved the provision.

The letters sent to the governor by groups and individual business owners stressed how the current sales tax inequity places in-state businesses at an unfair competitive disadvantage and has negatively affected their bottom lines.

Barnes & Noble CFO Jospeh J. Lombardi wrote: "Currently, Barnes & Noble operates at a competitive disadvantage to numerous out-of-state book dealers, who are not required to collect sales tax from California residents. This is true even for companies like Amazon.com, which operates five subsidiaries from offices located in California and has numerous California-based affiliates that refer traffic to its website, and yet, still does not collect sales tax from California residents." Lombardi noted that the e-fairness provision would protect "thousands of jobs here in California."

In his letter to Gov.Schwarzenegger, Rick Karp, president of Cole Hardware, with several locations in San Francisco, stressed: "It's important that you understand how critical this issue is to the ongoing health of small businesses in California. Out-of-state online retailers whose business model is based on sales tax avoidance enjoy up to nearly a 10 percent price advantage over thousands of retailers, both small and large. This competitive advantage has already contributed to the demise of businesses throughout the state, and it has throttled efforts of many others to grow and create more jobs for the state."

"We have weathered our share of crises in the past, to put it mildly!" wrote Amy Thomas, president of Pandora's Books Inc., [http://www.pegasusbookstore.com] in Berkeley, California. "But in the past, it has always been other businesses that have challenged our viability … in this case, the state of California itself is preventing me from competing on price. No matter how far I may slash my prices to approximate the prices at Amazon and other online retailers, no matter how clever and crafty and winning and neighborly and community-minded I am, at the end of every transaction I have to tack nearly 10 percent onto whatever price I have established. By not enforcing … the sales tax law, you have crippled my efforts to compete as a Main Street business."

"This is a no-brainer," wrote Rich Van Tassell of Bay Books [1] in San Ramon, California. "It's not a tax increase. It's a win for California's government, and it is a win for California businesses. The only losers will be Internet retailers that have built their businesses deliberately to avoid California taxes."

Many independent booksellers have written to the governor about this critical issue, but those who have not are urged to adapt ABA's template letter [2] and to e-mail it to the governor.

In addition, booksellers who have any questions about e-fairness can contact ABA's Senior Public Policy Analyst David Grogan at dave@bookweb.org [3] or (800) 637-0037, ext 6662. ABA also asks that booksellers notify Grogan when they have sent their letter. This will help ABA compile information to support the e-fairness lobbying effort.

Following is a look at what's happening on the e-fairness front in other states.

Virginia: E-Fairness Legislation Voted Down in House

Though last week the Virginia State Senate voted overwhelmingly to pass an e-fairness bill, the legislation did not have the same success in the House of Delegates, where -- despite the support of ABA- and CBA-member bookstores, as well as testimony from Danny Givens of Givens Books and Little Dickens [http://www.givensbooks.com]in Lynchburg -- it was defeated.

As of press time, however, it was expected that e-fairness language would be included in the Virginia budget, so ABA continues to ask its member bookstores to contact their legislators in support of e-fairness. If the budget passes with an e-fairness provision, out-of-state online retailers with online affiliates in Virginia would be considered to have a physical presence in the state. As such, these large online retailers would be required to collect Virginia sales tax, thereby leveling the playing field for the state's bricks-and-mortar businesses.

To help booksellers in this important advocacy outreach, ABA and the Southern Independent Booksellers Alliance (SIBA) have prepared a template letter [4] that booksellers can adapt and e-mail to their delegates.

Booksellers with questions regarding how SB 660 will help their business are urged to contact ABA's Senior Public Policy Analyst David Grogan at dave@bookweb.org [5] or (800) 637-0037, ext 6662. ABA and SIBA also ask that you notify Grogan when you have sent your letter. This will help ABA compile information to support the e-fairness lobbying effort.

Illinois E-Fairness Needs Bookseller Support

ABA, the Great Lakes Independent Booksellers Association (GLIBA), and the Midwest Booksellers Association (MBA) continue to call on booksellers in Illinois to support e-fairness legislation, SB 3353, currently under consideration in the Illinois State Senate.

If SB 3353, which is sponsored by Sen. Jeff Schoenberg, is signed into law, out-of-state online retailers who earn more than $10,000 through online affiliates in Illinois would be considered to have a physical presence in the state. As such, these large online retailers would be required to collect Illinois sales tax, thereby leveling the playing field for Illinois' bricks-and-mortar businesses. Sen. Schoenberg introduced the legislation directly due to the request of Roberta Rubin of The Book Stall at Chestnut Court [6] in Winnetka, Illinois.

Notably, in his annual letter to stockholders, Sears Chairman Edward Lampert said that he supported e-fairness legislation, as reported by the Wall Street Journal [7]. "There remains, however, one advantage that the major online retailers retain that is both unfair and problematic, for competition and for communities and jobs as well," Lampert wrote. "For customers in many states Amazon.com and other online retailers are not required to collect sales taxes on purchases made by their customers." Lampert supports "a leveling of the playing field for ecommerce merchants. Either we all collect taxes or nobody collects taxes."

To help in this important advocacy outreach, ABA, GLIBA, and MBA have prepared a template letter [8] that booksellers can adapt and send to their local state senator [9]. Booksellers who are represented by Sen. Schoenberg are encouraged to thank him for introducing this important bill.

Booksellers who have questions regarding how SB 3353 will impact their business are asked to contact ABA's Senior Public Policy Analyst David Grogan at dave@bookweb.org [5] or (800) 637-0037, ext 6662. ABA, GLIBA, and MBA also ask that booksellers notify Grogan when they have sent their letter. This will help the groups compile information to support the e-fairness lobbying effort.

Maryland Booksellers Urged to Write Senators Now

ABA and the New Atlantic Independent Booksellers Association (NAIBA) continue to ask Maryland booksellers to support e-fairness legislation currently under consideration in the Maryland State Senate.

If SB 824, which is sponsored by Senators Madaleno, Conway, Currie, and Kelley, is signed into law, out-of-state online retailers who earn more than $10,000 per year through online affiliates in Maryland would be considered to have a physical presence in the state. As such, these large online retailers would be required to collect Maryland sales tax, thereby leveling the playing field for the state's bricks-and-mortar businesses.

To help booksellers in this important advocacy outreach, ABA and NAIBA have prepared a template letter [10] that booksellers can adapt and send to their local state senator [11]. Booksellers who are constituents of Senators Madaleno, Conway, Currie, or Kelley are urged to thank him or her for introducing this important bill.

Booksellers with questions regarding how SB 824 will help their business are urged to contact ABA's Senior Public Policy Analyst David Grogan at dave@bookweb.org [5] or (800) 637-0037, ext 6662. ABA and NAIBA also ask that you notify Grogan when you have sent your letter. This will help ABA compile information to support the e-fairness lobbying effort.

Nevada Introduces E-Fairness Legislation

Last week, Nevada Gov. Jim Gibbons issued a Governor's Proclamation to convene a special session of the legislature, and within that proclamation is a nexus law provision, Item 10. Item 10 would require out-of-state retailers with online affiliates in Nevada to collect Nevada sales tax, thereby leveling the playing field for the state's bricks-and-mortar businesses.

The legislature is currently considering the proclamation, so ABA, the Mountains and Plains Independent Booksellers Association (MPIBA), and the Southern California Independent Booksellers Association (SCIBA) are urging booksellers to contact Nevada legislators immediately and ask them to support Item 10, the nexus law, in the Governor's Proclamation.

ABA, MPIBA, and SCIBA have prepared a template letter [12] that booksellers can adapt and send to their state legislator [13].

Booksellers with questions regarding how Item 10 in the Governor's Proclamation will impact their business should contact ABA's Senior Public Policy Analyst David Grogan at dave@bookweb.org [5] or (800) 637-0037, ext 6662. ABA, MPIBA, and SCIBA also ask that booksellers to notify Grogan when their letters have been sent. This will help ABA, MPIBA, and SCIBA compile information to support this lobbying effort. --David Grogan [5]