Assemblymember Nancy Skinner Announces the Introduction of E-Fairness Legislation to Level the Playing Field for California Businesses

"This legislation will close the current loophole in California tax law which has allowed out-of-state companies to avoid collecting California sales and use tax," said Assemblymember Nancy Skinner (D – Berkeley). "Out-of-State online retailers designed their business model to avoid collecting sales tax. This puts our Main Street businesses, who play by the rules, at a competitive disadvantage. It's not fair to hurt California businesses who are struggling to keep their doors open."

"It's not just small businesses that are paying the price when online-only stores don't collect sales taxes ― all Californians pay a price.

We all pay a price when small businesses close their doors and lay off workers because they can't compete in an unfair marketplace. We also see reduced tax revenues that fund essential government services, said Bill Dombrowski, President and CEO, California Retailers Association. "Out-of-state, online-only retailers cost state and local governments billions in lost tax revenues. That means that unpaid sales taxes from these retailers could help make sure we have teachers in the schools, cops on the streets and emergency personnel in firehouses. It is time to address this issue and level the playing field."

Online-only mega retailers are exploiting an out-dated law that essentially provides them an advantage of nearly 10 percent. Based on a 2010 report, it is estimated that retail businesses physically based in the state – and employing California workers – are losing $4.1 billion in sales to online-only retailers.

"As a small business owner, we need to make sure our local businesses are given a fair opportunity to compete," said Alzada Knickerbocker, owner, Avid Reader in Davis, California. "The current law right now gives out-of-state online businesses nearly a 10 percent advantage which puts us at a disadvantage. We are asking the state to fix the law and make sure these out-of-state online companies who do business in California and collect the same taxes as our local businesses."

Assembly Bill 153 by Assemblymember Skinner provides "e-fairness" by ensuring that out-of-state online retailers that do business in California remit to the state sales tax in the same way California businesses must.

"Educators are struggling to do their jobs with reduced funding," said Marty Hittelman, President, for the California Federation of Teachers. "We believe closing this loophole will be extremely beneficial to education in California and will provide some relief to schools."

E-fairness is supported by a broad coalition of small and large businesses, public safety organizations, nurses, teachers, and local community organizations including: California Retailers Association, California Business Properties Association, Northern California Independent Booksellers Association, Los Angeles Area Chamber of Commerce, VICA (Valley Industry and Commerce Association), Inland Empire African American Chamber of Commerce, Latin Business Association, Black Business Association of Los Angeles, Sacramento Police Officers Association, and small businesses such as apparel, jewelry, furniture, auto body, audio visual, and auto body stores located in communities throughout California.

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