Following drawn out negotiations with lawmakers, Amazon.com has conceded to charging sales tax in California, formerly a tax-free state for online shoppers.
As of Saturday, all online orders placed through Amazon are subject to the California sales tax, which can range between 7.25 percent and 9.75 percent.
Students like Tyler Ziak, 20, a business major at Cal State Fullerton, said a price hike such as this may ward off potential shoppers like himself.
“I feel like it’ll probably affect my buying habits when it comes to online purchases,” said Ziak. “The whole reason why I buy online most of the time is to be able to avoid the sales tax.”
Ziak also said that he prefers to do his shopping online, because it is easier to compare items and he doesn’t need to worry about whether a physical store will have his desired item in stock.
“It’s just a lot easier to compare things, whereas in a store you’re just limited to the stock that they have in the actual store,” Ziak said.
Some students seemed more understanding of the tax, such as Christina Blasco, 18, a mathematics major.
“It’s what they have to do to make some more money,” said Blasco.
Blasco noted that she prefers shopping in brick-and-mortar retailers because she feels going hands-on with the product gives the shopper a much better idea of what they are actually buying.
The online divisions of many retail stores stores such as Walmart, Best Buy and Target have all charged sales tax for some time now, leaving Amazon as what was one of the only holdouts for tax-free online shopping.
The Los Angeles Times reported that revenues in California from the new Amazon taxes are expected to reach as high as $100 million in just the first year of collection.
In recent years, the online retailer agreed to collect sales taxes from Kansas, Kentucky, New York, North Dakota, Pennsylvania, Texas and Washington. The tax standard is expected to continue to more states over time.
Abdunasser Duella, an economics professor at CSUF, said he feels that now is not necessarily the best time to be adding a tax.
“Whenever you increase taxes, you’re going to reduce consumption,” said Duella.
Duella said imposing a tax on online shopping is an inefficient way to even the playing field between online retailers and traditional stores.
He said that instituting a tax creates a wedge between the marginal cost and the marginal benefit, which ultimately is not something that people should be doing in a period of slow economic growth.
The Orange County Register reported that the reason Amazon has begun to agree to collecting sales taxes is because the company is in need of physical warehouses.
A Supreme Court ruling in 1992 decreed that states could not force retailers to charge taxes, so long as they did not have an actual physical presence in the state.
As a result, in exchange for being granted a physical presence in the form of much-needed warehouses in California, Amazon has submitted to charging sales tax at the insistence of California lawmakers.
Other online-based retailers, including Newegg.com and eBay.com, have more particular rules when it comes to sales taxes. Newegg, for example, only charges sales tax in California, New Jersey, and Tennessee.
Meanwhile, eBay Inc. stipulates that only sellers using eBay as a business are required to charge sales tax.