Online retail giant Amazon, has expressed its opposition to a proposal by New York Governor Eliot Spitzer to force out-of-state companies to collect sales tax on items sold over the internet to New York residents.
Under the terms of the provision, included in Spitzer's budget, all electronic retailers with annual sales of USD10,000 or more in New York would have to collect the state's minimum sales tax, regardless of whether they had a 'bricks and mortar' presence in New York.
The decision, expected to raise USD47 million, was initially left out of Spizer's budget, but, facing a slowdown in tax revenues as global financial turmoil continues to affect Wall Street - a major source of state revenues - the Governor has quietly reinstated it.
While other states have talked about implementing similar measures, New York would be the first state to enforce it, and Amazon has indicated that it intends to fight the proposal.
"This would be a radical departure from anything that's being done anywhere in the country," Paul Misener, Amazon's vice president of global public policy, told the Associated Press.
Misener pointed out that about half a dozen other states, including California, Michigan, North Carolina and Texas, had considered, but abandoned, such plans.
Misener's widely reported comments have once again highlighted the hugely controversial issue of how state sales taxation affects interstate commerce, particularly goods and services sold over the internet.
About 17 states have joined the Streamlined Sales Tax Project (SSTP), which seeks to establish uniform definitions for taxable goods and services, and maintain a single statewide tax rate for each type of product. However, while some retailers support the SSTP, businesses in general are lukewarm or hostile to the plan, which they say will impose burdensome new recording and reporting requirements.
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