Amazon has announced plans to start charging sales tax in the remaining four states that require it. In the early days of the company, the fact that online companies were not required to charge sales tax gave them a very significant advantage over those who owned physical stores in the states that required the tax. Initially this didn’t prove to be a significant threat to traditional stores but, as online sales grew, the number of complaints regarding the advantage online stores presented increased. Now, as sales have increased, the number of physical locations Amazon required has also gone up, to the point where the company now charges sales tax in all but four states that require the tax. Starting April 1st, though, this will no longer be the case.
From next month onward, Amazon will charge sales tax in Hawaii, Idaho, New Mexico and Maine, meaning the company will officially charge it in any states that require it. Initially, Amazon only started charging the tax wherever the law required it due to the expansion of its services via the creation of warehouses and data centers across the country. The latest additions, though, appear to simply be in order to enforce the policy nationwide, instead of gradually doing it as the company further expands, therefore avoiding any confusions. The additions now officially put the company on par with physical retailers, meaning the tax advantage no longer exists. Unfortunately for the latter, though, this is unlikely to stop Amazon’s expansion, with many customers no longer interested in the price advantage, instead the overall commodity is what attracts customers, especially with services such as Amazon Prime which guarantee two-day delivery.
With the new policy coming into effect next Saturday, it’ll remain to be seen what customers reactions will be, as well as reactions from competitors. Nonetheless, with the tax now enforced in all states where necessary, it’ll also remain to be seen how the company decides to further expand its operations over the course of the next year. Considering the tax is a nationwide policy now, it’s likely the company will start expanding its operations wherever it deems strategically beneficial without worrying about increasing prices.