Amazon prepping $50m facility in Connecticut, will start collecting 6.35% sales tax

Feb 4, 2013
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Amazon prepping $50m facility in Connecticut, will start collecting 6.35% sales tax

One of the great things about Amazon is that shoppers don't have to pay sales tax on their items. However, the online retailer is slowly adding exceptions to various states around the US, Connecticut being the newest one added to the list. The state of 3.6 million people will begin to pay a 6.35% sales tax on Amazon starting in November. Meanwhile, however, the company is planning to build a $50 million fulfillment center that is said to create hundreds of jobs.

From the Connecticut sales tax alone, Amazon will generate about $8 million in the first year it collects it, and anywhere from $13 million to $15 million in the second year. The company will begin charging the sales tax on November 1, 2013, which is just in time for the start of the holiday shopping season when Amazon usually see its highest revenue figures.

So far, several states have are currently paying sales tax on Amazon or are set to begin charging it sometime this year, including New Jersey, Texas, and Massachusetts. The reason why Amazon and other online retailers don't charge sales tax is because state governments cannot force a company to collect sales tax unless the business has a physical presence in the state. However, as previously mentioned, state governments are working hard to change that specific law.

As for the new facility, Amazon is planning to invest $50 million in Connecticut over the next two years to build a fulfillment center somewhere in the state. Other details are not yet known at this point, including where the plant will be located, but the company plans to create hundreds of new full-time jobs from the project. It's not known whether or not the sales tax levy has a connection with the funds necessary to build the new facility.

[via SFGate]


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