PALM DESERT, Calif. - The world's largest online mall, Amazon has been tax-free for nearly two decades. That's all about to end for California shoppers tonight and customers have responded by stocking up before the state sales tax kicks in.
The new California law goes into effect at midnight after a year of being postponed. Only a few other states like New York and Texas collect online sales tax.
Last year the state legislature passed a bill forcing approximately 200 e-retailers, including Amazon and Overstock, to start charging the 7.25 to 9.75 percent that varies by county. But in response to resistance from those retailers, the state legislature struck a deal for a year long grace period. In exchange for the grace period, Amazon said it would create thousands of seasonal and full-time jobs and invest $500 million in creating various facilities here in the Golden State. The company promised to open two million-square-foot distribution centers in Northern and Southern California.
""Everybody could use the tax money, every state, from California to Massachusetts," said Leon Arouth, who lives in the Coachella Valley.
Coachella Valley shopper John Penner admitted he's shopped quite a bit to avoid paying the sales tax, but added "I do think at the end of the day if we're going to support local businesses there has to be some kind of equity in terms of, you know what, paying for it in a tax. Whether you're buying it online or in the location that you live in or the state that you live in"
Officials estimate the tax will generate over $300 million a year, $100 million of that coming from Amazon alone. Experts say the new law should also help bricks-and-mortar stores that require a much larger staff to compete with online retailers.