Advertising sites hit by California sales tax

Californian websites that provide comparison shopping services and discount coupons are seeing their range of offerings narrow as online retailers abandon them to escape a state tax on Internet shopping.

Several online retailers have followed a lead taken by Amazon and severed links to Californian websites that carry advertisements or links to their products, a move that enables them to avoid a new demand to collect sales tax from Californian shoppers. The tax measure was passed in a state budget last month as California struggles to reduce a $9.6bn deficit. It has been backed by traditional retailers such as Walmart and Best Buy, which say it is unfair that most online shoppers do not pay sales tax. But e-commerce executives say that rather than raising tax revenue it will kill off business in the state that is home to Silicon Valley and leave shoppers with fewer options.