On Friday morning I awoke to this message From Amazon.com (6 26 2009)
We regret to inform you that the Rhode Island state legislature is preparing to pass an unconstitutional tax collection scheme that, if passed and not vetoed by the governor, would leave Amazon.com little choice but to end its relationships with Rhode Island-based Associates. You are receiving this e-mail because our records indicate that you are an Amazon Associate and resident of Rhode Island.
Please note that this is not an immediate termination notice and you are still a valued participant in the Associates Program. All referral fees earned on qualified traffic will continue to be paid as planned.
But because the new law is drafted to go into effect once enacted, we will have to terminate the participation of all Rhode Island residents in the Amazon Associates program on or before the day on which is it enacted. After the termination day, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com nor will we accept new applications for the Associates program from Rhode Island residents.
Note that other states, including Maryland, Minnesota, and Tennessee, considered nearly identical schemes, but rejected these proposals largely because of the adverse impact on their states residents.
The governor's website is
http://www.governor.ri.gov/ [ http://www.governor.ri.gov/ ],
the Rhode Island legislature's website is
http://www.rilin.state.ri.us/
[ http://affiliate-program.amazon.com/ http://www.rilin.state.ri.us/?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=assoc-center-1&pf_rd_r=&pf_rd_t=501&pf_rd_p=&pf_rd_i=RhodeIsland062609 ],
and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/ [ http://www.performancemarketingalliance.com/ ].
We thank you for being part of the Amazon Associates program, and we will apprise you of next steps.
Sincerely,
Amazon.com
On Monday Morning I found that, I and all other affiliates in Rhode Island had been dropped by Amazon and our accounts closed to us.
This action by Amazon has created a little excitement here in Rhode Island but NOT YET enough.
I don't think the RI legislature nor the Governor's office are aware of the potential damage that may have already been done. It is not the sale tax per se that is the issue -- there are enough problems with that without this. It is the additional unemployment in the state with the third highest in the nation.
The real issue is that many individual, sole proprietors who have started legitimate businesses using the Amazon and/or other affiliate programs as a key element of their business plan, are now without a business. Business models such as Drop and ship, "clickthrough", renting ad space on websites, etc. are the way the web based business is developing.
These are not the traditional sales tax revenue streams. They don't fit the "brick and mortar" local sales tax model. Yet the issue which faces these private contractors and, businesses is that the legislature deems them to be an extension of Amazon.com Corporation. As result the legislature has deemed it within its power to impose upon a foreign (non-RI) corporation not doing business in Rhode Island a tariff, that is a customs duty, on all products shipped into the state of RI by that company.
In order to protect itself and any legal claim it may or may not have to the unconstitutionality of one state imposing a customs duty on the products shipped from another, Amazon has canceled all its ties with anyone who was enrolled in their affiliate program. This includes sole proprietors, and llc's who have enrolled and with the many nonprofit organizations who depend on innovative fund raising opportunities such as "clickthrough".
To the degree that the sole proprietors depend on the affiliate relationships for their income, I wonder how many more unemployed non-taxpaying individuals have been created by this poorly considered attempt by the legislature to avoid another year of poor fiscal legislation and third world economic development planning.
While the world moves toward freer and freer trade between countries for a 21st century global economy, RI moves backwards into the 19th century isolationist mode.
The argument is offered that this sale tax will level the playing field between Big Amazon and little mom and pop stores in RI. That is an illusion someone smoking a weed that the legislature wanted to legalize in a limited way contrary to federal law might come up with.
First, mom and pop stores serve a very useful function when they serve a specific need in the community. But second, when they are inefficient, poorly managed and unable to adapt to changing times by modifying or adapting they business model to the times then they will die with or without the help of the legislature. A sales tax on Walmart does not make mom and pop competitive with Walmart. The big box stores have done more to un-level the playing field than any invasion of mail order purchases.
There is nothing to stop a mom and pop store from setting up a website to expand their potential customer base beyond their block, town, city or for that matter the state. Further, if they have any sense at all, they will offer to rent, or even give away, space on their website to promote other peoples sites, just as they now post notices for others in their brick and mortar store windows.
Why Amazon you might ask? Because this is where the battle has broken out. It might next be Google, Ebay, Overstock or any of the thousands of websites that have joined an affiliate program for a major internet business. As you can see I am still enrolled in Adwords on this BLOG, but for long?? What's next?
When I planned to become an Amazon Affiliate it was with the idea that if I was going to recommend a book, movie, CD, or other product to one of my coaching or consulting client it would be easier for them to click on the Amazon widget and make the order from my site. In return for the referral Amazon would be paying me for space I gave it on my website to advertise. Well that never happened because I am still working on the site http://www.januslifecoaching.com and the Amazon widgets had not been installed.
Certainly I can still refer clients to Amazon and Amazon will get paid but I won't and I won't be paying the RI income tax on my profit.
Well maybe I can now apply for unemployment, or for a grant under the New Trade and Globalization Adjustment Assistance Act of 2009.
No comments:
Post a Comment