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Ex-Lawmaker: Amazon Sales Tax Would Cost California $150M

LOS ANGELES (CBS) — A former state senator on Tuesday called on voters to repeal a new law that requires some of the biggest online retailers to collect sales tax in the state of California.

Under the new state budget agreement, customers who fail to report any tax not paid on transactions with merchants like Amazon will now face increased scrutiny under a three-pronged legislative tack to close the loopholes.

And while many lawmakers expect the state to reap an estimated $200 million windfall from firms that maintain a "physical presence" in California, former State Senator George Runner of the state Board of Equalization is not one of them.

Runner told KNX 1070 that it all comes down to what the state defines as a taxable "business".


"That's what this debate is really all about, and that is whether or not under the U.S. Constitution that California can force Amazon to be the collector of sales tax, and I don't believe we can," said Runner.

Runner said that projections has warned from the very beginning that revenue projections may have been on the overly-optimistic side.

"In fact, the reality is California is going to see less money because as these affiliates are cut off — not only by Amazon, but by literally thousands of other out-of-state internet companies — California is probably going to be losing about $150 million a year in income tax," said Runner.

The relocation of such firms would also likely slash jobs across the state, he added.

The Supreme Court recently defined a "brick-and-mortar" business as one that has receives or processes retail sales orders that are fulfilled within the state, Runner said.

In order to get the referendum on the Feb. 2012 ballot, Amazon would need to collect 504,760 valid signatures from California voters — which amounts to nearly 5 percent of the ballots cast for governor in the November election, according to the Secretary of State's office.

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