Online retailer Amazon cut ties with its Connecticut advertising affiliates today, as a result of a new tax state lawmakers passed as part of the two-year budget agreement.
In a letter to its advertising affiliates, Amazon said it would immediately cease its Amazon Associates Program in Connecticut because of a the new tax. The provision, better known as the Amazon Tax, requires online retailers to collect a 6.35 percent sales tax from online sales, even if they don’t have a physical presence in the state, as long as they enter into advertising relationships with Connecticut-based Web sites
“Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue,” the Amazon Associates Team wrote in the letter. “We deeply regret that we must take this action.”
The Connecticut Office of Fiscal Analysis said the measure would raise $9.4 million a year, but only if online retailers don’t terminate their affiliate agreements in the state.
Amazon is the latest of about 50 online retailers to end their advertising relationships in Connecticut because of the tax. Overstock.com was the first to sever its Connecticut relationships in May.
As a result of Amazon’s decision today, Connecticut residents will no longer receive advertising revenues from Amazon.com, Endless.com, MyHabitat.com and SmallParts.com
Consumers may still buy products from these Web sites and have them shipped to Connecticut.
“This is something that was easily foreseeable and utterly predictable,” said state Sen. Andrew Roraback, R-Goshen. “We are offering a false hope to Main St. retailers, while inflicting harm on Connecticut internet businesses.”
