People of Virginia: Online shopping is great, right? High discounts, cheap shipping and no taxes… oh, wait. Looks like the commonwealth’s State Senate Finance Committee voted 14-1 to get the ball rolling on a bill that would levy a sales tax on some products purchased through online retailers.

Rather than just tax all online purchases delivered to residents of Virginia, the so-called “Amazon” bill, sponsored by Senator Emmett “Grinch” Hanger, proposes to collect a 5% tax on Virginia-based businesses that sell their wares through bigger sites like Amazon.com and Overstock.com.

The bill has the backing of the Virginia Retail Merchants Association and seeks to “level the playing field for the many bricks-and-mortar businesses.” Hanger claims that the tax will bring in an extra $17 million in revenue in the first year.

However, some point out that Amazon and other sites will simply do as they’ve done in other states: sever their relationships with Virginia-based affiliates. You’re going to put Virginia businesses out of business if you do that,” said Reggie Jones of AOL said about the bill.

The bill now moves on to the next step in the approval process. Virginia Governor Bob McDonnell has previously said he would veto any tax increases, so the chances of the bill being passed as-is look pretty slim.

Panel backs collecting Va. sales tax on Web buys [Richmond Times-Dispatch]

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