Amazon Beware: Republicans Drop Opposition to Online Sales Tax

Republican governors have joined their Democratic colleagues in supporting a bill that would end the sales tax break on online purchases. Amazon AMZN, eBay EBAY and other online stores will have to prepare themselves for arguably the biggest challenge to their business since they began. Amazon has already made a move that would make it attractive to consumers in another area. If it can no longer be the cheapest, Amazin will set out to be the fastest as it looks to start a new "same day delivery" service. According to Slate.com, Amazon initially filed numerous legal challenges against the new sales tax bill, but it has stopped fighting that war and shifted operations. If it collects taxes, Amazon will be able to set up warehouses in the bigger metropolitan areas. Its long-term aim is to be able to get the product in your hand within hours of you pressing the "purchase" button. The company will still have minimal overheads so, against the odds, Amazon may be able to turn the sales tax bill to its advantage. According to the Wall Street Journal, New Jersey Governor Chris Christie, Republican, recently reached a deal with Amazon that will see the company collect sales tax on online purchases in his state. In exchange, Amazon will set up distribution facilities in New Jersey. That deal would seem to confirm that Amazon is prepared to give up the sales tax fight in favor of building a warehouse in the bigger areas. Unsurprisingly, brick-and-mortar retailers are heavily in favor of sales tax for online stores, as they say that they have a 5-10 percent disadvantage compared to retailers like Amazon and eBay. "Having one of the most recognized and widely popular Republican leaders take this position gives other politicians comfort that the online sales tax is fair and helps state budgets in crisis," Scott Mason, a vice president at Lowe's LOW told the Journal. The bill seems to conflict with Republican ideology, that government should not interfere with businesses, especially if said business does not have a presence in the state within which a customer lives. However, the Republican budgets are straining as much as anyone else's, and so they are looking to even the playing field for all retailers. On Monday, Amazon traded at about $216, down roughly 1.2 percent. Follow me @BCallwood.