Online shoppers in New York will continue to enjoy tax-free ecommerce this Christmas, as state governor Eliot Spitzer has opted to rescind a new internet policy.
The new legislation was due to come into force December 7th, requiring online retailers to collect state taxes on products bought over the internet.
Leading ecommerce sites that use affiliate marketing - such as Amazon and Buy.com - would have been particularly hard hit by the new sales tax law. Websites redirecting traffic to these retailers via adverts and links would have also been taxable.
"Governor Spitzer believes that now is not the right time to be increasing sales taxes on New Yorkers," announced state budget director Paul Francis.
"He has directed the Department of Tax and Finance to pull back its interpretation that would require some internet retailers that do not collect sales tax to do so."
Critics of the proposed legislation claim that it would have prompted widespread challenges on constitutional grounds and that it was in direct contravention of the 1992 US Supreme Court ruling in the case of Quill Corporation versus North Dakota.
The ruling stated "sales tax collection requirements cannot be imposed on an out-of-state corporation that does not have a substantial physical presence within the state".
Fears had also been expressed that the successful implementation of the tax policy would have prompted other states to turn an eye to the burgeoning ecommerce industry.
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