RICHMOND, VA (WWBT) - To the shock of many retailers, the Virginia Senate passed the "Amazon Bill" Friday. The bill would force the online retailer to collect sales tax on items you buy. That means you'll have to pay that 5%. Local stores say it's about time.
When a local store, such as Saxon Shoes, sells you a $100 pair of shoes, it will charge you $105 to cover the 5% state sales tax.
But online retailer Amazon.com would only charge you $100. Amazon does not collect Virginia's sales tax, even though other online retailers do. Local shop owners say that gives Amazon an advantage, and short-changes the community.
"Not collecting sales tax is detrimental to our road system, to our school system. It's detrimental to our fire departments who need to service these businesses," explained Gary Weiner, owner of Saxon Shoes.
Local shop owners tried to pass a bill two years ago to get online retailers to collect sales tax, but the bill failed. A few months ago Amazon has announced it will open two distribution centers in Chesterfield and Dinwiddie, creating 1,350 jobs. For that, the state is giving Amazon $4 million in aid. Now a bill introduced this year is picking up steam.
"The bill is much more narrowly drawn this year. It says if someone has a physical presence, like a warehouse, they need to collect and remit the tax," said Rob Shinn, representing the Virginia Alliance for Main Street Fairness, a coalition of Virginia retailers.
State law already requires that. Even though Amazon already has a warehouse and data center in northern Virginia, it won a 2007 Department of Taxation exemption because those sites don't handle sales. This bill would change that.
"It could mean about $20 million plus to the Commonwealth," said George Peyton of the Retail Merchants Association, citing an impact study by the Department of Taxation.
If an online company doesn't charge you sales tax, you're actually supposed to remit it on your state income taxes. But most people don't do that. If the bill passes, you will have pay the 5% when you make your purchase on Amazon.com.
"In the end, it's going to tighten up a little more, and in the end, I'm going to buy less," said Josh Chafin, an Amazon shopper.
The Governor has met with Amazon. But there's no word on whether this bill could impact Amazon's decision to put distribution centers in Central Virginia. Our questions to Amazon have gone unanswered. Other states have negotiated to get Amazon to collect sales tax, but sometimes after a few years delay.
"My concern on this issue is that they will push this off until 2013, 2014, or 2015, which I don't believe is the right thing to do," Weiner said.
The bill just passed the Senate and now goes to the House. We'll keep you posted on what happens.