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E-tailers press for tax ballot referendum

July 14, 2011 12:00:00 AM PDT
The battle over California's new online sales tax continues. On one side, Amazon.com is hoping to overturn the tax. On the other side are small businesses and their supporters. There were calls Thursday in Sacramento for Amazon to back down.

The fight over California's new "Amazon tax law" is certainly heating up. This one may actually end up in court.

Lawmakers who led the charge on the state's new so-called "Amazon tax law," which forces certain "e-tailers" to start collecting the sales tax, fired back at the Seattle-based company.

They say Amazon's effort to put the issue before voters in a referendum is unconstitutional.

While anybody can try to overturn a law the Legislature passes through the referendum process, Democrats say it does not apply to bills attached to the budget, known as "trailer" bills.

"If any bill can just be referendum, then how can we ever get a budget in California?" said state Assemblyman Charles Calderon (D-Montebello).

Attorneys for Amazon.com say the right to a referendum on any bill passed by majority vote is sacrosanct, so they will proceed. They're trying to save California jobs.

The trade association representing 25,000 California-based affiliates of e-tailers like Overstock.com and Amazon desperately wants the law overturned.

Those California-based websites provided links to Overstock and Amazon for a cut of the sales. Rather than start collecting the state sales tax, Overstock and Amazon ended their affiliations. The group says California needs those relationships back.

"This is such an important issue for California. It's a process that allows citizens to take control of laws that clearly are bad for the state. Let the voters decide," said Rebecca Madigan, Performance Marketing Association.

Meanwhile, businesses with actual storefronts in California continue to struggle with what they call an unfair playing field where they have to collect the sales tax.

Their customers often leave their stores, saying they can go online and avoid paying the sales tax, forcing Lauren Lundsten to match the tax-free deal just to keep customers.

"We can give them 10 percent off or you can eat the sales tax, or whatever. It's the same thing. It's 10 percent off just to complete a deal because you know that they'd walk out the door," said Lauren Lundsten, owner of Swanberg's on J.

The referendum is currently before the state attorney general, Democrat Kamala Harris. Harris will decide whether a budget trailer bill can be legally put before voters. If it's approved, Amazon will need 504,000 valid signatures to get on a ballot next year.


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