Lawmakers want to impose Calif. e-commerce tax

December 9, 2010 6:49:11 PM PST
You may be doing a lot of holiday shopping on line and it's nice to save on the sales tax when you do. But are you paying the use tax? A lot of Californians are not, and a lot of officials want to make sure you do.

The malls may be crowded for the holiday shopping season, but more and more consumers have been online buying their gifts. Numbers from Comscore shows cyber spending is up 12 percent so far this year, compared to last year.

"I buy clothes for my grandkids, buy clothes for myself. I was online looking for a motorcycle for my husband," online shopper Linda Flowerdew said.

Many sites don't charge a sales tax and they don't have to if they don't have a physical store in California.

"Absolutely love it. I hate paying sales tax," Flowerdew said.

Apparently, so do millions of other Californians. The Board of Equalization sent out its annual warning to residents to say they still owe a "use" tax equivalent to the sales tax.

The state loses over a billion dollars from folks who don't voluntarily 'fess up to it on their tax form. The average California household owes $60 a year.

"We need that money and that means a billion dollars less for our schools, for our seniors and for our children and childcare, and the many other services that Californians expect government to provide," St. Sen. Mark Leno, D-San Francisco, said.

Plus, California retailers can't compete if they have to charge a sales tax while out-of-state online competitors don't.

"It puts me at a very unfair advantage," small business owner Melica Stijakovic said. "I don't know why they can't do some formula that would make it fair for everybody."

None of that is enough to convince Flowerdew to be honest, especially since the state lacks the resources to enforce it.

"Anything I can get that I don't have to pay taxes on, I'm happy," she said.

Some people are honest. The Board of Equalization says it collected $10 million from people who filled out the use tax line on their income tax form last year. The rest of us face a 10 percent penalty if caught.


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