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Sales Tax Matters

Best Buy Goes Up When Amazon Charges

Published: 01/16/2013 03:24am
Best Buy’s online sales and store pickups have increased in markets where Amazon has recently begun charging sales tax, according to Reuters.  Amazon has started charging sales tax in California (see "Amazon to Start Charging Sales Tax"), Texas, and Pennsylvania.  "Mail order" companies are supposed to charge sales tax in states where they have physical operations; Amazon’s warehouses make it subject to sales tax in those three markets, and others may follow.

Best Buy sales were up 4% to 6%, and pick-ups at stores were up 6% to 9% in the three states where Amazon recently started charging tax, as compared to the rest of the Best Buy chain.

Amazon has been gaining share in almost every merchandise category, especially at higher price points.  Texas, Pennsylvania, and California are all big states, and brick and mortar retailers in those states are no longer at as big a disadvantage on price now that Amazon is charging taxes.  And other states may now begin following suit and forcing Amazon to charge taxes in states where it has distribution or other operations.  Over-all, it could level the playing field, at least a little,e between Amazon and brick and mortar specialty stores.
 
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