The Power of Online Retail: Amazon Could Beat the California Taxman

California lawmakers may give a one-year reprieve in their contentious battle over state taxes, according to a report in the Los Angeles Times.

Amazon has been fighting a new law that demanded Internet retailers collect state taxes starting this past July if they had offices, workers or other connections in California. Lawmakers hoped the tax would earn the economically depressed state $200 million annually. Amazon fought the law viciously, pulling out of the state and leaving 25,000 affiliates without the online platform that extended their sales reach.

It would appear that lawmakers have wised up to the fact that online retail is not just a sales tax cash cow. Online retailers are effective sales and distribution platforms for local businesses that rely on the ease of delivery and powerful media and marketing reach it gives.

California Assemblyman Charles Calderon (D) is quoted by the LA Times as saying that he is confident the deal has enough votes to pass and that it will be taken to Governor Jerry Brown. Governor Brown has not commented on the deal but earlier said he would be very “concerned” with any change in legislation that would lead to decreases in state revenue.

Amazon has been facing the same battles for tax revenue reprieve in Colorado and in North Carolina.

California has been one of the hardest hit states during the current recessionary slump, with an unemployment rate of about 12% and a $22 billion deficit.

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