LOS ANGELES ? In advance of September 15, when e-commerce giant Amazon.com will begin collecting sales taxes on purchases made by California residents, many state residents are cramming in last-minute tax-free shopping, the Los Angeles Times reports.
Californians currently pay 7.25% to 9.75% in sales taxes, so savings on big-ticket items such as electronics when purchased through Amazon add up. And state residents are taking advantage of a final week of tax-free purchases.
"I've ordered nine things in the last two weeks," said Chris Cheng, whose purchases include a hands-free roaming camera for $199.99, five pounds of protein powder for $53.99 and exercise resistance bands for $26.99. "Any time you can save money, that's a good thing."
Tech entrepreneur Abdel Ibrahim said he would buy a MacBook Air and MacBook Pro on Amazon before September 15, a move that will save him about $270 in sales taxes.
"It makes a huge difference," he said. "If there's anything else I can think of where I can fork up some money and save a couple hundred bucks, I probably will."
The buying frenzy comes after an extended fight last year between Amazon and California lawmakers, which resulted in Amazon agreeing to start collecting sales taxes.
In addition to Amazon, more than 200 other companies located outside of California may also be required to collect sales taxes on items shipped within the state.
Tax revenue from these online sales are estimated to top $300 million annually, with more than $80 million of that coming from Amazon.
Mom-and-pop shops and bricks-and-mortar retailers are applauding the move, as they have complained for years about an unfair sales tax advantage for internet retailers.
"Every retailer has the ability to match a price, but no brick-and-mortar retailer can say to a consumer, 'Don't worry, I won't collect that sales tax,'" said Jason Brewer, a spokesperson for the Retail Industry Leaders Assn. "That 6 to 10% price advantage is a huge problem and distorts the free market."
Amazon spokesperson Scott Stanzel said the company, which already collects sales taxes in seven states, expects a smooth transition and minimal fallout.
"We offer customers the best prices with or without sales tax," he said. "We collect sales tax, or its equivalent, in more than half of the areas where we do business, and we're pleased to say we're thriving in those geographies."
Bipartisan momentum among state governor is increasing for the collection of state sales taxes from online purchases.