Quote:
Bill requires online retailers to collect a sales tax on items purchased by state residents.


It was only a matter of time I guess before one of the states in the Union decided to try and tax the internet. New York State legislators, not alone in a perennial state budget deficit, have decided that the state should start requiring online retailers to collect the sales tax on items they ship there.

Dubbed the "Amazon Tax," the bill is now awaiting the signature of the new governor David Patterson. Considering that he's a Democrat a signature is most likely a mere formality.

"This is a first step - but a critical one - in our ongoing battle to level the sales tax playing field between New York retailers and the out-of-state Internet giants that have, for years, capitalized on an unfair and unintended competitive advantage driven solely by tax policy," said James Sherin, president and CEO of the Retail Council of New York.

Considering that Amazon is really just a huge online Wal-Mart, minus the $2 polos of course, is there really even a retailer playing field left anymore that Wal-Mart hasn't paved?

For its part the state Business Council has voiced its displeasure with the legislation.

"Albany invented the Amazon.com tax because they failed to cut spending," said the council's Heather Briccetti. "As long as they don't recognize the economic reality and continue to increase state spending, they'll keep inventing new taxes like this one."

Amazon plans to fight any plan to make it potentially raise its prices by 8% for NY state customers. The state counters that it and other online retailers could face audits and bills for back taxes going back years unless they agree to start collecting sales tax for the state by June 1.

Either way, the matter won't be settled any time soon.