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    Amazon Gives Oxnard A Disproportionate Sales Tax Advantage

    You’ve probably seen the Amazon warehouse off the 101 in Oxnard, but you’ve never stopped to consider the tax implications. They are substantial. The sales tax revenue generated by Amazon’s distribution warehouse in Oxnard causes a loss of revenue for other cities in Ventura County as those municipalities are not collecting the sales tax. Here’s why.
    California passed a law, AB147, because of the ruling in the Wayfair case in the US Supreme Court. Called California’s new online sales tax collection law, AB 147 allows the state to collect sales tax revenue based on the city where the buyer lives. In other words, if you live in Ventura and buy something online, you pay Ventura’s sales tax rate of 7.75%.
    It was straightforward for online sales through Amazon until 2016. Before 2016, Amazon operated its warehouses an LLC structure. An LLC called Golden Bear owned the merchandise in each warehouse, so the prevailing tax law apportioned the sales tax to the city in which the Amazon buyer lived. 
    In 2016, Amazon collapsed its LLC structure, changing every warehouse into a point of sale. This one change altered how the county divvied up sales tax. So, when Amazon opened its warehouse in Oxnard, it changed how the state collects sales tax for all purchases from Amazon that pass through that warehouse.

    Being Present Matters

    Having an Amazon warehouse in Oxnard matters. Under AB 147, if Amazon ships goods from a warehouse outside the state, the 1% Bradley-Burns part of the sales tax goes to the city where the buyer lives. Yet, because Amazon has a warehouse in Oxnard, the 1% Bradley-Burns part of the sales tax goes to Oxnard rather than the city where the buyer lives. As a result, the other nine cities in Ventura County lose out.
    For example, if you live in Camarillo and buy a $500 TV from Amazon, you will be charged Camarillo’s sales tax rate of 7.25%, or $36.25. Because Amazon has a warehouse in Oxnard, $5 of the $36.25 will go to Oxnard instead of Camarillo. 
    Cities are only now realizing the exact effect of the change. For example, the Director of Finance of Ventura estimated what the city would lose. He calculated Ventura would lose between $750,000-$1,200,000 per year from online sales through Amazon. The amount in other cities will differ, but there is no doubt that each city’s General Fund will suffer.
    The rationale for the law is that Oxnard will need the added tax revenue to offset the effects on the roads and the environment of heavy trucks moving in and out of the warehouse.


    For a city by city tax comparison, visit our website here: TAX BREAKDOWN

    Machiavellian or Happy Coincidence?

    Did city officials in Oxnard know of the sales tax windfall to the city of locating the warehouse there? It’s uncertain. One thing is sure, the other nine cities in the county were unaware of how the Amazon warehouse in Oxnard would hurt them.

    Answers To Other Questions You May Have

    Some may wonder how the Amazon warehouse escaped SOAR, Save Our Agricultural Resources. The transaction was a private real estate deal between Amazon and the property owners, Sakioka Farms. While the land was growing crops, Oxnard zoned it as industrial land and was exempt from SOAR.
    Others may wonder if the City of Oxnard or Ventura County offered Amazon any incentives to locate the warehouse in Oxnard. There were no sales tax sharing agreements, waiving fees or other incentives offered to Amazon. The City of Oxnard did expedite the planning approval process but charged Amazon extra fees. In fact, at one point, Amazon paid Oxnard to hire another staff person to shepherd the project through the process.

    Future Implications

    It’s early, and each city is learning the total sales tax revenue loss it faces. One thing is sure, though. The General Funds of the other cities in Ventura County will lose revenue because of the Oxnard Amazon warehouse.
    What that revenue loss will mean for the residents of those cities is this. Cities will cut services, or there will be a scramble to replace the lost revenue through increased user fees or taxes. Unfortunately, none of these prospects is good. 
    Citizens should expect more road potholes or fewer police officers and firefighters. Also, businesses can expect longer wait times to approve building or expansion plans, which costs them more money. 

    What Can Be Done Now

    This situation highlights the complexities of sales tax collection in the digital age. Yet, it’s surprising that City Councils throughout Ventura County are not more concerned about the loss of revenue. 
    The city of Moorpark is the one city in Ventura County that acted. In September 2021, Moorpark joined the League of California Cities to call on California’s legislators to pass legislation to create a more fair and equitable distribution of the Bradley-Burns 1% local sales tax
    Since then, the League of California Cities met with participating city managers in April 2022. The meeting focused on background information and allowed all members to share their goals and interests. (See item VII for a summary of the session). 

    Forewarned Is Forearmed

    At first, you may not have thought about how the Amazon warehouse in Oxnard impacts you. What appeared to be a simple real estate transaction turned into an inequitable sales tax windfall for one city at the expense of nine others. When it comes to distributing sales tax, it takes time for the impact to reach residents. Yet, in this case, the pattern is evident early. Nine cities will suffer unless voters and elected officials take steps to diminish the effect of AB147


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    Fuzzy Logic
    Fuzzy Logic
    1 year ago

    If you go back to when the Oxnard warehouse was being considered you would find 9 cities crying “not in our backyard!” So I say ‘lump it” 9 cities. Oxnard had the guts to build it, you did not. On the other hand, California is for sale and Amazon’s ability to change tax rules to suit it is really at the heart of problem.

    1 year ago

    Craphole Oxnard needs all the help it can get!

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