Democratic Governor, Jerry Brown signed a bill into law that will increase the cost of online purchases for all his Californian constituents. Starting Friday, every out-of-state retailer will have to collect taxes on any online sale from customers based in California. Among those companies that will be affected most will be Amazon.com and other large retailers.
The new tax is expected to increase government revenue by $317 million dollars a year. Despite the additional revenue for the fiscal mess of California, the burden does not just fall upon consumers. Due to their mandated price increases, Amazon.com and Overstock.com Inc have both told California based affiliate marketers that referrals of click through customers will no longer receive commission.
Many affiliates are looking to move to other states, which in the end would only decrease revenue raised for the state. Despite this, the law is to take effect Friday. There may however, be constitutional challenges to this new law. “We oppose this bill because it is unconstitutional and counterproductive,” Amazon wrote to its California based business partners. A similar law has been challenged in New York.