Amazon.com is ready to start collecting some significant sales tax from California customers following difficult and prolonged discussions and negotiations with California state officials.
The changes could result in a major windfall for Amazon, the online retail giant, which comes from its decision to create distribution centers in California and which results in sales tax revenue accruing to their locations in San Bernadino and Patterson.
Reportsf from the Sacramento Bee indicate that Amazon’s stance irks some lawmakers and public-policy experts, who say cash-strapped cities shouldn’t be coughing up tax dollars to curry favor with big employers.
“Cities are induced to do a number of things – they end up competing against one another for sales-tax generators and employers,” said state Sen. Mark DeSaulnier, D-Concord. He’s considering introducing a bill next year that would limit – or ban altogether – how much cities can share sales tax dollars.
Others say tax-sharing is a legitimate means of luring new business, particularly after the Legislature did away with redevelopment incentives last year.
“We’ve been stripped of all real opportunities to do anything to make the regional economy more advantageous,” said Jim Morris, chief of staff to San Bernardino Mayor Patrick Morris. “We don’t have any real tools.”
For now, officials with both cities say they aren’t actively negotiating with Amazon about sharing sales tax.
They also say they’re confident the warehouses will open, whether or not a deal is struck on sales tax. Nevertheless, they say they’re willing to discuss the tax-sharing idea with the company.
“We’re very much open to it,” said Rod Butler, city manager of Patterson. He said Patterson might share up to 75 percent of its sales tax windfall with the company.
At stake is an estimated $20 million a year in “local” sales tax revenue – the 1 percent of the 7.25 percent state rate that goes back to local jurisdictions.
Just who will receive the revenue is in part based on what Amazon decides it will do with it.