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CT Residents to Pay State Sales Tax on Amazon Purchases

What's more, Amazon.com will be building a new distribution center in Connecticut and will create up to 300 jobs over the next two years under a deal announced Monday by Gov. Dannel P. Malloy.

 

Starting Nov. 1, Connecticut residents who make purchases from online retailer Amazon.com will be required to pay 6.35 percent in state sales tax on each transaction, thus generating much-needed additional tax revenue for the state.

What's more, Amazon.com will be building a new distribution center in Connecticut and will create up to 300 jobs over the next two years under a deal announced Monday by Gov. Dannel P. Malloy.

The deal is expected to generate more than $15 million a year for the state, according to a press release from the governor's office. Amazon is yet to select a site for the new distribution center.

“All in all, this is a win for our state’s taxpayers, our main street retailers, and our workforce,” Governor Malloy said in the release. “Amazon’s multi-million dollar investment and the hundreds of jobs that will come with both the construction and operation of their future facility will unquestionably boost our local economy."

Under current federal law, out-of-state retailers are not required to collect tax on sales to Connecticut. Residents are required to pay sales tax on items they buy from online retailers, but in reality, most ignore the law. Currently Congress is considering legislation that would require online merchants to collect and remit taxes in the states where they do not have a brick and mortar presence, or "nexus."

Malloy said although Amazon's agreement with Connecticut to collect and remit sales tax only partially addresses the problem (i.e. not all online retailers are willing to make such deals with the state, and Amazon is one of the first), it is "a great step," and will have a secondary effect of allowing state merchants to compete more fairly against Amazon.

"We… look forward to working with Governor Malloy toward passage of the legislation now being considered by Congress that would finally resolve the sales tax issue, level the playing field for all retailers, protect states’ rights and allow states to collect the revenue owed," said Paul Misener, Amazon vice president, global public policy.

“With strong support from Governor Malloy, this has been one of our top priorities for over a year now,” said Department of Revenue Services (DRS) Commissioner Kevin Sullivan. “It’s a great result for our consumers and businesses, state and local revenue, new investment and new jobs. Amazon is a great company. Good tax policy can be good business policy too.”

Donald Borsch Jr. February 06, 2013 at 06:59 PM
Yes, Dennis, my icon shows I am a huge fan of taxes, doesn't it? LOL!
Dennis Maksymiw February 07, 2013 at 03:36 AM
I was referring to the tendency for people not to pay sales tax on online purchases. Everyone who is upset over this seems to be upset because they won't be able to avoid those sales taxes anymore (unless they shop online at businesses with no CT presence). I personally am glad that Amazon is coming in. They will give our local (to the state) economy a boost and it will make remitting sales tax a whole lot easier, because I'll no longer have to keep track of what I buy from them.
JM February 07, 2013 at 08:31 PM
Dennis - One thing that has made Amazon competitive has been the lack of sales tax collection...in other words, that 6% savings gets passed on the consumers, artificially lowering prices on thousands of items, and thereby increasing Amazon's profit margins. Do you think that Amazon will continue to remain competitive going forward and be able to maintain their workforce as w hole throughout the country? My .02 - this is a wash. Prices will level out with local retailers...Amazon will no longer be as dominant anymore vs. the local stores. Amazon will lose sales and jobs while the local stores will add a job or 2 here and there. Zero sum game.
Sean M February 07, 2013 at 08:40 PM
This is smoke and mirrors. There is no legitimate reason for Amazon to set up in CT. Taxes, expenses, and labor are too high. Government regulation is one of the worst in the nation. The only way it would make business sense is if they are getting a handout. Liberals treat us as pawns of the state, using us as an unending ATM machine. Businesses are leaving states like CT. I do not blame them. The bias from the Patch is in full gear. The state does not need the money. The Democrats refuse to spend within our means. Just because government does something does not make it legitimate. We have not had a balanced budget in years in CT. We borrow money to spend what we do. This cannot continue.
Donald Borsch Jr. February 07, 2013 at 09:55 PM
sean, You said "legitimate reason, CT, taxes, handout" in the same paragraph. *gigglesnort* You are obviously burdened with common sense and fiscal acumen. Know your role, sean! Stop being so...so...so..you know...anti-government!

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