Amazon Threatens to Eliminate California Affiliate Program Due to New Sales Tax


And another one bites the dust. California could become the fifth state to lose its Amazon affiliate program thanks to a controversial sales tax affecting online retailers.

On Wednesday, California governor Jerry Brown signed a law that will require online retailers to collect sales tax from customers even if retailers do not have a brick and mortar store in the state. Though Amazon is based in Seattle, Washington, California, like four other states before it, has ruled that Amazon’s affiliates (10,000 in the case of California) are enough of a physical presence to warrant a new sales tax. Amazon, however, disagrees and has threatened to cancel its California affiliate program if the law is enacted.

"We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors," Amazon wrote in a letter to Golden State affiliates on Wednesday. "Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action."

It seems Amazon may be right about similar legislation resulting in little, if any, new tax revenue. General Treasurer Frank T. Caprio of Rhode Island, one of four states with a sales tax law for online retailers, has reportedly said that the law has “hurt Rhode Island businesses and stifled their growth” and that the affiliate tax should be “repealed immediately.”

New York, Illinois, Rhode Island, and North Carolina have all passed laws requiring online retailers to collect sales tax, and Amazon has canceled its affiliate programs in all four states. Arizona, Hawaii, Louisiana, Massachusetts, Minnesota, Mississippi, Missouri, New Mexico, Tennessee, Texas, and Vermont are considering similar legislation.

Source: Ars Technica

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