Wednesday, September 7, 2011

Is Amazon killing independent bookstores by not collecting sales tax? Not really..

After reading on David Streitfeld's article on the New York Times on Amazon's efforts to avoid collecting sales tax in California (as well as other states), I was thinking about the importance of this refusal on independent bookstores.

The problem? "Any Californian who buys a book or a DVD player from Amazon is supposed to pay a use tax when filing state taxes. In practice, however, few do." And Bill Dombrowski, head of the California Retailers Association, adds "Amazon is killing our business in bricks-and-mortar stores."

I believe Amazon's refusal to collect sales tax is wrong and immoral, but is it really killing indie bookstores? I decided to check it out.

I heard yesterday a great book review of Maureen Corrigan on "The Submission" by Amy Waldman and decided to check what happens if I live in Novato, California and want to purchase this book. For my unscientific experiment I compared an online order from three independent bookstores located in San Francisco (The Booksmith, City Lights Books, Green Apple Bookstore) and an online order from Amazon.

  Amazon  City Lights  Booksmith      Green Apple
Book price 13.68 26 26 27
Shipping 3.99 10 8 5.9
Tax 0 2.21 2.21 2.3
Total 17.67 38.21 36.21 35.2

Sales tax as part of the difference between the store and Amazon:

11% 12% 13%

Bottom line: What kills indie bookstores is the fact that Amazon sells books in half price and provides much cheaper shipping. Not the sales tax. Even if Amazon will start paying sales tax tomorrow (and they definitely should), indie books are still going to be in trouble with such a difference in costs.

Raz @ Eco-Libris