City | 2:47 pm | February 4, 2013 | By Michelle Hackman

Amazon to open in Connecticut, levy sales tax

Connecticut will start collecting sales tax on all Amazon purchases starting this November.
Connecticut will start collecting sales tax on all Amazon purchases starting this November. Photo by Amazon.

For Connecticut residents, shopping online may suddenly become a bit more expensive.

Connecticut Gov. Dannel Malloy announced this morning that Amazon will open a distribution center in Connecticut in the next two years, a move that is projected to employ over 300 workers and will allow the state to levy a sales tax on all Amazon purchases.

Starting this November, the state will begin charging a 6.35 percent sales tax on all Amazon products, according to The CT Mirror.

“All in all, this is a win for our state’s taxpayers, our Main Street retailers and our workforce,” Malloy said in a press release. ”Amazon’s multimillion-dollar investment and the hundreds of jobs that will come with both the construction and operation of their future facility will unquestionably boost our local economy.”

The state has been fighting Amazon for the past two years to tax its sales, as analysts estimate it loses tens of millions each year in potential sales tax revenue through online transactions. In 2011, the state passed a statute after New York’s so-called “Amazon Law,” which requires local affiliates of companies to charge sales tax whenever they direct customers to their online operations. Once the statute was enacted, Amazon severed many of its affiliate ties in the state, avoiding the sales tax but ultimately also losing business.

The governor said Connecticut expects to gain $15 million in tax revenue from Amazon per year.

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