Connecticut E-Book Customers to Receive More Rebates Amazon Terminates Connecticut Affiliates
by Lon Seidman | Jun 10, 2011 7:48am
(6) Comments | Commenting has expired
Posted to: Government 2.0, Tech Biz
Online retailer Amazon.com today informed its Connecticut affiliates that it is terminating their relationship, effective immediately. The contract terminations are the result of a new law that requires online retailers to collect tax from sales referred by Connecticut websites.
“We opposed this new tax law because it is unconstitutional and counterproductive. It was supported by big-box retailers, most of which are based outside Connecticut, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action,” the company wrote in an email this morning.
Amazon’s affiliate program rewards websites for linking to products, paying out commissions of 4-6 percent depending on the volume of sales the site operator generates. In May, Overstock.com announced it was terminating its relationship with affiliates, and a number of other sites followed suit. Amazon has been largely silent on the issue until this morning.
Questions remain as to whether or not the tax will even be collected from the remaining online retailers. In an April memo to legislators, Department of Revenue Services Commissioner Kevin Sullivan expressed doubts over the state’s ability to collect the tax.
Retailers that have a presence in the state and/or collect Connecticut sales tax on purchases such as Apple and Walmart will not be impacted by the law.
“We are not surprised, and that we are deeply disappointed that the legislators did not heed our warnings that this is the exact roadmap that Amazon, Overstock and others have used in other states where this law was passed,” Tom Caporaso, of Clarus Marketing Group in Middletown, said Friday. Caporaso runs a web site called freeshipping.com which is affiliated with many of these online retailers.
Lawmakers who opposed the tax said it doesn’t mean Connecticut consumers are going to change their shopping habits and suddenly decide to shop at brick and mortar stores. They’re going to continue shopping online and these Internet companies with a presence in Connecticut will move or go out of business.
“The Amazon tax levels the playing field for the small businesses on Main Street,” Sen. President Donald Williams, said Thursday. “We heard from the chambers of commerce, from small businesses all around the state, that said look just give us a break in terms of competiting with the Internet businesses in California and in the far flung corners of this country.”
Tags: Amazon, tax, retailers
(6) Comments
posted by: Noteworthy | June 10, 2011 9:10am
So now, businesses located in Connecticut will be harmed because our truth challenged governor and the irresponsible legislature passed the Amazon Tax, a law they knew was unconstitutional, that generated no revenue for other states and that is tied up in court in at least two states. But rather than wait, the brainiacs in Hartford pushed forward anyway and as predicted, robbed CT businesses of much needed revenue. These so called leaders are stupid and irresponsible.
posted by: Doug Hardy | June 10, 2011 12:32pm
There’s more to the story. We’re taking a closer look at this because it’s a complicated situation and the discussion thus far hasn’t covered all of it.
While local retailers have to pay sales taxes, anyone who uses Amazon (or similar web-based retail middle man operations) does not. Gov’t hasn’t figured out how to make up for the sales tax revenue lost to online transactions. In the short term, it’s a problem for local affiliates.
It’s also worth noting that this decision by Amazon is a political choice. They certainly can set up their software to charge sales taxes on a state-by-state basis, but they don’t want to and they chose to push back politically instead by punishing local affiliates.
We’re going to flesh out the story and probably do a podcast discussion tonight or in the near future.
posted by: Tessa Marquis | June 10, 2011 6:43pm
Fine. Shop locally gang!
I know some independent bookstores who are eager for your business. They pay property taxes and sometimes can afford to hire people, who in their turn pay income taxes and eat at local restaurants.
Down with Barnes & Noble! Down with Amazon!
(PS A good independent bookstore will order any book you want and you get it just as quickly as from Amazon.) (PPS If you are buying anything other than books from Amazon you are just plain lazy.)
posted by: redman | June 13, 2011 9:13am
Connecticut is highest taxed, most anti business state in the country. Taxes kill jobs. If you’re out of work call and thank your democratic state representative.
