‘Amazon tax’ legislation faces epic battle in months to come

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Financially, the so-called “Amazon tax” is a relatively tiny piece of the California budget package that Democratic legislators and Gov. Jerry Brown enacted last month. Politically, however, it’s a very big deal.

The budget trailer bill would compel Internet retailers to collect sales taxes, notwithstanding a U.S. Supreme Court decision that constricts states’ powers to do so.

Democrats like it because it would raise some money, and California’s retailers such as Wal-Mart like it because it would make Amazon, Overstock, et al., less competitive.

Amazon has severed its relationships with California “affiliates” and filed a referendum petition that, if it makes the ballot, would let voters have the last word.

But will the referendum run afoul of Proposition 25 — the 2010 initiative ballot measure, which public employee unions sponsored, to reduce the legislative vote margin on the budget and its trailer bills from two-thirds to simple majorities?

Before any ballot battle, the rivals are poised for a legal showdown.

The tax measure, Assembly Bill X1 28, appropriates $1,000 to the Board of Equalization for administration.

Democrats placed token appropriations in trailer bills to qualify for simple majority votes under Prop. 25, and one section of the state constitution says appropriations are not subject to referendum.

Two Democratic legislators declared Thursday that the referendum is invalid due to Prop. 25. But Amazon cites multiple declarations by Prop. 25’s supporters that it would not dilute voters’ referendum rights, plus an opinion from the Legislature’s counsel to that effect.

Last August, for instance, Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Perez issued a statement that, if Prop. 25 passed, it “will not allow a majority of the Legislature to use budget trailer bills to enact new ‘referendum-proof’ programs or requirements.”

The Amazon petition is now before Attorney General Kamala Harris. She could conceivably declare it to be invalid under Prop. 25, thereby triggering a legal battle with Amazon’s attorneys attacking Proposition 25’s validity.

Harris is more likely, however, to clear the referendum for signature gathering. But if and when Amazon submits the signatures for certification, the California Retailers Association is poised to challenge them under Prop. 25.

Either way, the issue is headed for court, probably the state Supreme Court, and the entire initiative/ referendum system that is central to California’s convoluted political process will be on trial.

And if the Amazon tax bill survives all that, it faces a federal court battle based on the U.S. Supreme Court decision.

Dan Walters’ Sacramento Bee columns on state politics are syndicated by the Scripps Howard News Service.

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