Things are heating up on the online sales tax issue in California, where Amazon.com is leading the charge on a voter referendum that would exempt online retailers without a physical presence in the state from collecting sales tax.
We’ve tracked the effects of a similar online sales tax bill that was enacted here in Arkansas. In response to the Arkansas law, countless online merchants have ended their affiliate contracts in the state—meaning they won’t be collecting sales tax in Arkansas, and the people who were working with them have lost income.
(Be sure to check out that list of companies that are ending their Arkansas relationships; it’s much bigger than just Amazon, and that list is probably only a fraction of the total.)
In response, freshman GOP Rep. David Meeks has requested an interim study on the issue to determine “the potential fiscal impacts and loss of jobs to the state of Arkansas” as a result of the new law. Here’s a link to the full proposal.
Meeks, who voted against the bill (SB738) in the House of Representatives, says that much of the support it gained from lawmakers can be attributed to “misconceptions” about what it would do.
“I had some misconceptions about it myself,” he says. “I think the biggest one is that it will force these online retailers to charge sales tax. That’s what I had thought as well, but now that they’re pulling out the affiliate programs, we’re finding out that they’re still not going to have to charge sales tax.”
Meeks also noted that there was little clear sense of what the economic impact of the new law would be, but that estimates from the Dept. of Finance and Administration indicated it would generate no new revenue for the state. The key question now is to determine precisely what the negative effects will be, and how they can be mitigated.
“The more I’m finding out about this bill and the negative effect that it’s having on everyday Arkansans, the more I’m determined to try to get it repealed and to try to come up with a better solution than the one that’s already on the table,” he says.
Meeks has written about the issue on his blog. And for a perspective on how the bill is affecting people who make a living through online marketing, check out this interview with an Arkansas affiliate marketer.
UPDATE: Meanwhile, please note this Chicago Tribune story focusing on how Amazon is expanding its presence in states that aren’t pushing for online sales tax collections. These states, among them Arizona and Indiana, have foregone demanding that online retailers collect sales tax and are first in line when Amazon looks to establish new distribution centers. Read the whole thing.