Just received an email from Amazon.com:
Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.
We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.
There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
You may express your views of Colorado’s new law to members of the General Assembly and to Governor Ritter, who signed the bill.
Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.
We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.
Best Regards,The Amazon Associates Team
I’ve never seen much money back from being an Amazon Associate, so I’m not actually out any money. But the legislation (and, to a lesser degree Amazon’s reaction) is ruffling feathers in various places.
As a Colorado resident, I’m highly sensitive to the state’s budget woes (and an vehemently against the “fine, let’s just cut services more” mentality). As a consumer, I love that purchases through Amazon are sales-tax-free — and will be the first to admit that sometimes that’s the deciding factor for me in where I buy something (the netbook I just ordered being probably the most expensive example). One could argue that virtual storefronts impact the state much less than bricks-and-mortar ones, and so should be sales-tax-free, but that’s not necessarily convincing.
Wish there was a simple answer here.
Another case of one law for the rich, and another for us poor plebs. People will tell you that it’s the lack of high street shops that account for Amazon’s success, while not realising another major factor is the fact they do business from locations where they don’t have to pay tax. Not only does this drive physical shops out of business, it has a knock on effect on the economy- the tax doesn’t get paid. Additionally it takes money out of local circulation, and channels it to far off places.
Supermarkets are a good example of this in a more tangible example. I don’t know about now, but I do remember the figures from when I was studying it back in the early 90s. People say supermarkets are good for the local economy. In 1990 a Superstore supported 1 job per £250,000 of sales. High street shops it was £50k per job. Additionally the presence of shops helps support other shops with passing trade- superstores due to their size and car parking requirtements tend to be out of walking distance of the high street. Plus the money stays local and in circulation in that town.
No doubt its size also allows Amazon the oppotunity to pull the more immoral scams (if it wished to) that some supermarkets to.
Buyer “We’ll buy your Turkeys at 50p lb”
Farmer “You told me 70p in April, – I’d make a 5p lb loss”
Buyer “But now it is 2 weeks before Christmas- what you going to do with 20,000 turkeys”
Ever notice how all the fruit and veg looks the same- all apples the same etc. The Buyer only pays for that part of the crop which meets an arbitary standard, the rest is thrown and the farmer receives nothing.
Ever wonder why your favourite produt is on the top shelf, or too low? It may be the supply didn’t pay the placement fee demanded by the buyer.
Fruit farmers in the UK provided proof that when some of the supermarkets ‘gave to charity’ they got sent the demand “We are giving £10,000 to charity- please do so or we will stop buying from you.”
And WalMart drives living wages out of existence wherever it goes.
By the same token, everyone loooooooves the low prices (and convenience) of big box shopping and huge discounts. The Main Street / High Street shops can only survive, in that environment, by differentiating what they provide — better quality, local providers, different “boutique” product, better service.
Municipalities, by the same token, need to figure out for real whether what discounted revenue they get from luring a WalMart in with big tax breaks is actually worth it, especially with what it does to local retailers, impact on traffic, utilities, etc. Everyone’s seduced by the big shiny box, but it’s not a seduction with a happy ending.
The secret here is ‘KVI’ – Known Value Items. The shopper (let’s face it, Wife), knows the cost of the staples- bread, milk etc. The big boxes make a loss on these, or if the law is strict, virtually no profit. These pull the customers. The profit is on everything else, because ‘while you’re there…’. Likewise special offers. Sure, you’ll go in to look at the cheap TV, but while you’re there, you need some milk, and better get some bread, save going out later.
This is why the supermarkets in the UK fought so hard to get the book price agreement abolished. They use cheap Harry Potter’s as the lure, knowing once the mother is there, she isn’t going to go else where. Little bookshops needed the blockbusters to support them for selling the other stuff, that isn’t going to shift by the shelf load. I wouldn’t be surprised if in a few years it is virtually impossible to find anything not by Rowling, Dan Brown etc. People say ‘you can order anything on Amazon’- true, but you have to know it exists- you can’t browse Amazon, you rely on them presenting things to you.
Damn- meant to add three years ago or so a consumer programme did a survey on buying Christmas dinner, as the Supermarkets all offered cheap deals on Turkeys etc. Great, until you compared the cost of all the other bits- veg etc.
Supermarkets do the same here — and, really, we have (because the supers have been around longer) many fewer Main Street grocers. The irony being that the big discounters — WalMart, Target, Sam’s, Costco, etc. — are themselves now out-supermarketing the supermarkets in prices.