Amazon fights against sales-tax law

Amazon is appealing directly to the residents of California to overturn a new law that requires it to charge sales tax on online purchases made in the state.

The internet retailer has been fighting lawmakers across the United States who want to end the tax break that gives the company its big advantage over bricks-and-mortar retailers. It looks as if the showdown will be in California – the most populous state.

American states impose a sales tax, usually around 8 per cent, on purchases but exempt online retailers that do not have a physical presence in the state from collecting it.

Last week, after California's legislature passed the new tax law as part of an austerity-budget plan, Amazon called the law "unconstitutional and counterproductive". Several smaller states, including Connecticut and Illinois, are bringing in similar measures.

Amazon has filed paperwork aimed at getting the law overturned in a referendum of Californians. The company is collecting the 500,000 signatures needed for the question to appear on the ballot. Amazon says it will pitch the referendum as a vote on jobs and investment in the state, which it claims will be driven away by the online sales tax.

California officials say Amazon's tax bill this year is about $83m.