Two of the biggest e-commerce companies
Amazon
(
AMZN
) and
eBay
(
EBAY
) have opposing views on whether online retailers should collect
sales taxes or not. Amazon.com, switched sides in the
20-year old fight and now collects sales tax in Kansas, Kentucky,
North Dakota, New York, Texas and Washington. It plans to cover
several more states over the next year. Meanwhile, eBay Inc., has
stood by its position that the proposed sales tax would
negatively impact small businesses which form a major chunk of
its client base. It has instead proposed that retailers who have
a business that earn less than $5 million per year be exempted in
order for them to be competitive.
With presence in several states Amazon is already
collecting sales taxes
Amazon Inc. has a physical presence in several states where it
has warehouses and fulfillment centers. As the law requires an
online retailer to charge and pay sales taxes if they have a
physical presence in the state, the company is already collecting
taxes from users of those states. The company does not
expect significant impact on its sales as a result of the
nationwide application of the tax. It contends that it still has
the price advantage and the customers will stay with it on
account of the ease of shopping online coupled with quick
delivery. We expect revenues to be marginally impacted by the
increased taxes as some of the users may move over to the brick
and mortar stores on account of nearly equal prices. We currently
have a
$222 estimate for the company
.
eBay bats for small businesses with an agenda of its
own
eBay Inc. contends that the new levy would negatively impact
small businesses, a significant chunk of its user-base, as
they would have to bear additional costs by acting as tax
collecting agents for states when they are already burdened with
higher costs due to the relatively smaller size of their
operations. Besides, the new levy would require the company as
well as it users to keep track of more than 9,600 tax
jurisdictions, significantly burdening their operations. The new
tax would result in buyers having to pay more while sellers will
have to deal with lots of paperwork to track the various taxes
associated. We expect the added difficulty in the whole process
to have a small impact the volume of transactions over eBay
Marketplace, marginally driving down revenues. We currently
have a
$50
estimate for the company
.
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