California's move yesterday to tax out-of-state, e-commerce retailers, will cause "immediate devastating loss of income" to web-based business in California, says a group focused on the affiliate marketing industry. According to the Performance Marketing Association, the signing of ABX1 28, an attempt to balance California's budget, will lead to "dramatic income loss of small businesses and job loss". The bill requires out-of-state retailers to collect sales tax on purchases if they have any affiliates in the state of California. Affiliate programs allow website owners to collect a small fee for referring customers to e-commerce retailers, and have been a common way for web sites to monetize their Internet traffic.
Among firms which have cut off their affiliates as of last night is e-commerce giant Amazon.com. Several other states have implemented similar, e-commerce taxation bills, although a number of governors have vetoed bills after seeing devastating effects on their local, web-dependent businesses. The Performance Marketing Association said that the state is putting at risk $151M in state income taxes from California, web-based companies, who it says will likely go out of business or move out of state to preserve their incomes. The Performance Marketing Assocation represents affiliate marketing companies.