Silicon Valley Merchants Accuse Amazon of Skirting Tax Law

Small business owners from around Silicon Valley accused online retail giant Amazon.com Wednesday of not complying with new state "e-fairness" laws that require the company to pay sales tax.

The owners, who spoke at a press conference organized by StandWithMainStreet.com at , wanted to let the community know that their local brick-and-mortar businesses will contest any attempt to overturn the law by the large online retailer.

“We are here in support of keeping the e-fairness bill in place,” said Jeff Selzer, general manager, of Palo Alto Bicycles. “I don’t understand why it is OK for another business to do exactly what I am doing, and have that advantage when I don’t.”

In June, the California Legislature passed three bills meant to require out-of-state Internet retailers, like Seattle based Amazon.com, to pay a state sales tax in their transactions. Shortly after the law passed, Amazon.com cut off all ties with its California affiliates and filed a request for a referendum in hopes of overturning the law.     

“I hope that we can bring this message to enough Californians so that they understand their decision if they are confronted with the question,” said Clark Kepler, owner of in Menlo Park.  “If it is on the ballot, we ask that they think as residents and citizens of California, and not just as consumers. ”

The uncollected tax revenue has led educators to take the side of local businesses. They see the tax dollars lost in all those transactions as money that could be serving public education.

“The uncollected sales taxes are part of the underfunding of education,” said Don Dawson, a teacher at Silver Creek High and a board member of the California Teachers Association. “The sales tax is part of the revenue the state collects, and then they distribute it to various things, including education.”

Local sellers claim to have seen the loss of revenue first-hand as their shops become testing grounds for products that are later to be bought online.

“People come in and use your store as testing ground for products,” said Faith Bell, owner . The owners said that customers walk in to their shops and see if they like a product but ultimately choose to buy it on places like Amazon.com. 

Bell insists the she would not object to someone’s decision to purchase a book on Amazon.com if a sales tax was paid. “To me, that is very direct link between the tax dollar potential and the tax dollar loss.”

The fight for the effective implementation of an online sales tax has resulted in the joining of forces of traditional local competitors. They argue that their interests are the same and that fair competition is important for their products as a whole. 

“My sales would decline if other bike shops started going away,” upheld Mike Jacoubowsky, co-owner of  in Redwood City and Los Altos. He said he believes that the lack of physical bicycle shops would lead people to think that cycling is a rare practice. “You need a density of high-quality bike shops to support the activity … you don’t have Amazon.com lobbying for bike lanes or things like that.”

Amazon.com did not respond to a request for a comment.