SAN FRANCISCO
11/26/2012 02:08 pm ET

Cyber Monday Tax: California's Online Sales Tax Could Slow Holiday Sales

As agoraphobic consumers across the Golden State fire up their laptops and take part in the annual tradition that's made the Monday after Thanksgiving online shopping's biggest day of the year, a new wrinkle will likely make many pause before clicking "checkout."

This year marks the first Cyber Monday since California began collecting a 7.25-9.25 percent sales tax from online retailers on purchases made in the state.

For years, the Internet was generally considered a tax-free zone. However, as California's budget shortfall has grown, the state has explored new ways of raising revenue. According to the tax law's author, Assemblywoman Nancy Skinner (D-Berkeley), imposing this new fee could earn the notoriously cash-strapped state up to $500 million per year.

"When you're losing that sales tax revenue, that means it's affecting your roads, it's affecting the resources for local government, it's affecting the resources for education," Congresswoman Jackie Speier (D-San Mateo) told CBS News, adding that the tax would also eliminate some of the unfair advantages online retailers have over brick-and-mortar businesses. "People come in, they look at the product, they kick the tires. They take the knowledge that the retailer has about that product, then they go onto the phone and buy it on Amazon."

Amazon initially fought with California over the imposition of the tax but eventually reached a compromise.

Whether this imposition of sales taxes will slow online purchases remains to be seen. Forbes tax columnist Kelly Phillips Erb doubts the effect will be significant. "The argument has always been that taxpayers shop online because not paying sales tax makes items cheaper," she writes. "I tend to believe that’s not true. I think people shop online for convenience, not for tax avoidance. As that gap between those retailers subject to tax narrows, it will be interesting to see what shakes out."

By 2016, 14 states, from North Dakota to New York, will collect sales tax from online purchases.

Last year, online shoppers spent over $1.25 billion on Cyber Monday alone, a 22 percent increase over the previous year.

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