As if one was even needed, there is now another reason to shop local. Smaller and local retailers used to find themselves at a disadvantage when it came to the issue of sales tax and consumers. While they found themselves in a position of having to charge sales and use tax on their goods, online and out of state retailers were not required to do the same. This resulted in online and out of state retailers being able to charge less for their goods and ultimately entice more consumers to shop with them.
Recognizing the imbalance of the situation this created for local businesses, California decided to enact legislation that will place the majority of businesses on a level playing field when it comes to the application of sales and use tax. On April 25, 2019, California Governor Gavin Newsom signed into effect AB 147. This bill requires all retailers who exceed $500,000 a year in sales from deliveries made to California, regardless of that retailer’s location, charge sales and use tax on consumer purchases.
This legislation is good news for cities, counties, and the state for a few reasons. With the playing field now leveled, small businesses and local merchants may see an increase in revenue from shoppers, helping to provide a boost in local economy. In addition to this, local and state government could see an increase in available funding for budget items including critical infrastructure. Now in effect, it will be interesting to see the impact this legislation has on both the marketplace and local economy. An in depth analysis of AB 147 can be found here.