Online sales tax may have impacted Amazon sales during holidays

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Betsi Fores The Daily Caller News Foundation
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Sales taxes on goods purchased online may have hurt Amazon’s bottom line during the holiday season, though the impact will not be fully known until the company releases its fourth-quarter results on Jan. 29.

Brick-and-mortar arch-rival Best Buy saw online sales increase in three of the states where Amazon started collecting sales tax.

“There was a little softness in states where Amazon is now collecting sales tax,” R.J. Hottovy, an equity analyst at Morningstar, said to Reuters. “That isn’t surprising to me. It levels the playing field for brick-and-mortar retailers.”

After initially opposing online sales taxes, Amazon has been a champion of legislation that would implement such a tax nationally, most notably the Marketplace Fairness Act.

Advocates for the online sales tax maintain that it would level the playing field between online retailers and their brick-and-mortar competitors.

As The Daily Caller News Foundation previously reported, “online retailers have not been required to collect sales taxes in states where they lack a physical presence.”

In a effort to deliver goods faster, Amazon has opened a number distribution centers across the country, thus opening them up to being forced to collecting sales tax in all the new states that have distribution centers. In many states, in an effort to lure the jobs and potential revenue, the sales tax was waived for an initial period.

California’s online sales tax bears watching.

“The surge before the tax went into effect was much larger than I thought it would be,” said Scot Wingo, chief executive of ChannelAdvisor. “Californians definitely bought a lot in the three or four days before the tax went into effect.”

After California began collecting sales tax on goods purchased on Amazon on September 15, 2012, sales leveled to that of other states, though in early November, they slipped by nearly 10 percent below other states, data from ChannelAdvisor show.

“During one of the busiest holiday periods, in late November and early December, sales dipped further in California vs other states. Toward the end of the holiday period, client sales in California recovered,” Reuters reports.

“There was a sales impact of about 10 percent at the worst point of the dip,” Wingo said.

Legislation to pass an online sales tax has  wide bipartisan support. Surprisingly, many Republican governors have advocated the tax, which would allow the states another avenue to increase revenue during a time of budget shortfalls.

All three of the bills concerning an online sales tax expired at the end of the last congressional session, though they are expected to be reintroduced in the early part of 2013.

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