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Lawmakers in the North Carolina General Assembly voted on Wednesday to approve a state budget that includes both an affiliate nexus etax and a new tax on digital goods.

While the state estimates the new etaxes will generate a combined $36 million – out of nearly $1 billion in higher taxes included in the budget – retailers have already ended programs to collect what is likely an unconstitutional tax.  The Amazon Tax requires out-of-state retailers with no nexus in North Carolina to collect and remit taxes to the state when consumers arrive from a click-through advertisement on a website based in North Carolina.

The tax was included despite strong opposition from in-state advertisers who will directly lose business from retailers ending advertising contracts to avoid collecting the unconstitutional tax.  Similar measures were vetoed in Hawaii and California last month for this very reason.

The budget was produced by a Senate and House conference committee on Tuesday and rapidly approved by the legislature on Wednesday.  While the Democrat controlled General Assembly and Governor Perdue (D) negotiated for weeks on various tax hikes to be included, the eTaxes were consistently left on the table.

North Carolina joins New York and Rhode Island in establishing an Amazon eTax and 18 other states that tax digital goods.

For more information on internet taxation, visit or check out ATR’s eTax Policy Brief.  You can also follow "Stop eTaxes" on Twitter (@eTaxes) and Facebook.