L.A. Times Columnist Calls for Passage of E-Fairness Legislation

George Skelton, political columnist for the Los Angeles Times, believes that Amazon.com and other online sellers that have affiliates in the state of California should be paying sales tax on purchases by in-state residents.

In a March 24 “Capitol Journal” article [1], he asks, “What are Gov. Jerry Brown and the Legislature waiting for? There’s a $26.6-billion budget hole to be filled, and lawmakers have approved plans for plugging less than half.”

Puzzled that “there isn’t more of an uproar in the state Capitol,” Skelton says, “Regardless of whether you favor raising taxes – regardless of whether you support the governor’s plan to extend higher income, sales, and vehicle levies for five more years – at least we should all agree that taxes already owed should be collected.”

California Assemblywoman Nancy Skinner, who has been pursuing e-fairness for the three years now, told Skelton: “This is the first year where California businesses are on board. We’ve got the wholesale support of big retailers and small mom-and-pops. California businesses are finally fed up.”

Skinner’s bill, which cleared its first committee on Monday, March 21, is patterned after New York’s e-fairness law. It makes clear that the definition of physical nexus includes “affiliates,” that is, website operators that provide a link to an online seller in return for a commission on sales.

As it had done in other states with e-fairness legislation, Amazon is threatening to drop its California affiliates if Skinner bill’s is enacted.

But Skelton says, “Holding affiliates hostage in a desperate effort to continue tax-exempt merchandizing shouldn’t be condoned.”

Assemblywoman Skinner estimates that the state would “net between $250 million and $500 million annually” if affiliates in California began collecting sales tax, Skelton says. And a University of Tennessee study estimates that California will lose more than $1.7 billion in taxes that should have been paid on Web purchases this year.

“Sacramento politicians should move swiftly to protect local businesses and demand the state’s legal share,” Skelton concludes. “They should get off their inertia.”