Amazon Referendum Good — And Bad


If you believe in good government, you might well be conflicted about Amazon's attempts to use a referendum to block new legislation requiring sales tax collections on online purchases.

Amazon should get its referendum. And it should lose it.

It's unlikely to turn out that way, because of politics and the state constitution.

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Let's break down both pieces of this.

First, the referendum. The use of this direct democratic tool is relatively rare in California, where we prefer the initiative. An initiative is a new law or constitutional amendment that is put on the ballot to circumvent the legislature. A referendum is a ballot measure asking voters whether they wish to block an act of the legislature.

Referendums are thus a healthy check on the legislature. (Initiatives, which circumvent the legislature and the budget process and all norms of accountability, can sow chaos and aren't so healthy). But California makes referendums very hard. There are just 90 days to gather signatures, which makes qualifying the measures very difficult (an initiative law requies the same number of signatures but allows for 150 days). And rules prevent many kinds of legislation -- including laws related to the budget and taxation -- from being reversed by referendum.

It may be that the legislation requiring online retailers to collect sales tax is not legally subject to referendum. There are different opinions on this, and a court may well have to decide. It's quite possible that Amazon won't get its referendum.

 But if the company is lucky enough to qualify a referendum and withstand legal challenges, it's likely to win and reverse the tax. It's hard to imagine Californians voting to may more on what they purchase on line. (Californians already are required to pay use tax on these purchases themselves, but almost no one complies).

So a successful referendum would be good politics -- but bad policy, since why should on-line retailers have a leg up on California's brick-and-mortar retailers.

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