Referenda Filed on “Amazon” Tax and Part of Redevelopment Proposal

It’s not news that this year’s state budget included controversial elements. However, some of those elements are now the subject of referenda that would ask voters whether they agree with the Legislature’s decisions, and the voters’ answers will affect county revenues.

The first referendum filed challenges the “Amazon” tax law, ABX1 28, which broadens the definition of which companies must collect sales tax when Californians buy from them. It does this by changing the definition of “retailer engaged in business in this state.” These retailers are the ones that must collect sales taxes Californians. The new law changes the definition from a discreet list of they types of companies that qualify to “any retailer…upon whom federal law permits this state to impose a use tax collection duty.” The commerce clause of the US Constitution prohibits states from imposing taxes on out-of-state companies.

The law also specifically applies the tax collection duty on retailer who are part of a commonly controlled group where at least one member of the group is in California and provides services or sales related to property sold by the retailer. This provision applies directly to Amazon, which is actually a collection of companies; one of the companies is the retailer Amazon.com, which claims not to be a California company, but the company that designs the Kindle, for example, is another Amazon company and one that is located wholly in California . Another member of the commonly controlled Amazon group located in California designs and manages the product search engine for Amazon.com.

Of course, the part of the law that has caused the most hand-wringing is the part that imposes the tax collection duty on companies that have commission partners within California .

Nothing in ABX1 28 imposes a new tax, it only shifts the responsibility for sending the state the tax due from the individuals making the purchase to the company from which they are purchasing.

Another referendum has been filed against the bill that would allow redevelopment agencies to continue to exist if they direct significant money to schools and certain special districts. Notably, it is not a referendum against the bill that would eliminate redevelopment agencies, and therefore if successful it would have the effect of eliminating redevelopment agencies. A representative of a group called the California Alliance to Protect Private Property Rights filed the referendum.

Referenda require fewer signatures to qualify for the ballot than initiatives, but they also have a much shorter time to gather those signatures. If they make the ballot, voters vote ‘Yes’ to enact the law or ‘No’ to repeal it. Referenda require majority voter approval.

You can find links to official documents related to the referenda below.

Amazon measure 

Amazon summary 

Redevelopment measure

The Attorney General has not yet prepared an official summary for the redevelopment measure.