On Monday, NTU sent a letter to the budget conferees of the California state legislature, urging them to reject a proposal to tax internet shopping. In relevant part, the letter read:
"States that have attempted to prey upon online retailers beyond their borders – either through sales tax reporting on Internet transactions or the creation of "affiliate nexus" schemes – have not raised the desired revenues. In fact, North Carolina officials report that the state's online affiliates tax has not yielded any revenue in the first six months of existence. Additionally, Rhode Island administrators say that their treasury has actually lost revenue following enactment of the tax. Now New York is mired in litigation over the constitutionality of its tax and Rhode Island is considering repeal. Several online retailers have also announced their intention to terminate their relationships with affiliates in Colorado due to its sales tax reporting requirement for online transactions. A loss of business activity is the last thing any state needs during this time of economic uncertainty. In practice, these tax schemes force higher prices on consumers, or even precipitate business closures."
The conferees postponed a vote on this proposal, following our letter and opposition from online retailers and customers. We'll continue to monitor this proposal and oppose it.