published Saturday, February 12th, 2011

Haslam: Amazon shouldn't collect tax

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    Staff Photo by Dan Henry/The Chattanooga Times Free Press Gov. Bill Haslam listens to questions as UTC Chancellor Roger Brown looks on during a question and answer session with government officials and local business leaders in the UTC University Center's Tennessee Ballroom on Friday.

Tennessee Gov. Bill Haslam said Friday that Internet retailer Amazon shouldn't have to collect sales taxes because of a new Hamilton County distribution center.

"I don't think because Amazon decides to build a distribution center here, that should change their tax status," he said.

While Tennessee residents are supposed to pay sales tax on items bought through Internet retailer Amazon, few do. Some states have suggested that Amazon should have to pay the tax if buyers don't.

Haslam, speaking after an economic development roundtable with business and political leaders at the University of Tennessee at Chattanooga, said the state "lives off of the sales tax" and that more people are buying goods online. But, he said, it's going to take a national effort to coordinate online sales tax payments from companies to states.

"The larger question is: Should Internet sales be taxable to the state, whether it's Amazon or anything else," he said. "I think all states will have to look at that."

Still, he said, there's a hearing before state regulators on the Amazon tax issue later this month.

"We'll have to see what happens in the hearing there," Haslam said.

Amazon is building 1 million-square-foot distribution centers in Hamilton and Bradley counties. The company plans to invest about $139 million in the centers and create more than 1,400 full-time jobs and more than 2,000 seasonal slots.

However, the online sales tax issue is simmering in several states. In Texas, it boiled over earlier this week, when Amazon said it would close a distribution center and scrap expansion plans after a dispute with the state over millions of sales tax dollars.

Dave Clark, Amazon's vice president of operations, wrote in an e-mail obtained by The Associated Press that the center will close April 12 due to Texas' "unfavorable regulatory climate."

The Texas comptroller's office last year demanded $269 million in uncollected sales taxes from Amazon. The state contends Amazon is responsible for sales taxes not collected on online sales in Texas.

hall tax

In other issues, Haslam said Friday he's willing to study how many people leave Tennessee because of the state's Hall income tax and to look at its effect on older Tennesseans on fixed incomes.

The Hall tax on dividends and interest brings in about $175 million, Haslam said. He said he doesn't know how the state would replace that income, but the issue merits study and should include the estate tax as well.

Lewis Card Jr., vice chairman of tufting equipment maker Card-Monroe Corp., said at the roundtable that he knows of "a lot of folks who are moving to Florida and taking their money with them just to get out of Tennessee" to avoid the tax.

Haslam also said education and economic development are "inextricably linked."

The governor, who visited the Volkswagen and Alstom plants while in Chattanooga, said the operations' factories aren't "our grandfather's world."

"If we don't realize we've got to raise our game in work force development, we'll get left behind," he said.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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XMarine said...

The Governor should have said...further behind.The way he said it means we are on par with the rest of the nation.I have only been been to 34 states & 4 other countries...and we are behind in work force development.Cooler to watch MTV & mimic the stars than to study & prepare for the real world.The dropout rate should be the first clue.

February 12, 2011 at 6:26 a.m.
dendod said...

There will be millions of sales tax dollars generated by the 1,400 full time and thousands more part time jobs from Amazon building here. I think the Governor makes perfect sense in his decision. He's going to show people how to properly run a state.

February 12, 2011 at 7:54 a.m.
cannonball said...

I think the all internet sales should be taxed. I also believe that people over 65 should not have to pay any tax of any kind. They have paid enough already.

February 12, 2011 at 9:14 a.m.
moon4kat said...

Seems like a sensible approach by Haslam. The jobs created -- and money spent by Amazon employees in TN -- will more than compensate. Alternatively, Amazon could leave, as it did in Texas; that would be a bad outcome.

February 12, 2011 at 10:10 a.m.
yaffay said...

It is rather absurd that Haslam is willing to protect Amazon from collecting taxes at the expense of local business establishments that do have to collect the sales tax. If someone can order a $1500 television from Amazon with free shipping and no sales tax, they will do that instead of go to a local store. Both the local business and the state lose out.

Huge tax breaks and incentives for big businesses are simply a form of corporate welfare by a nicer name.

February 12, 2011 at 10:12 a.m.
rockman12 said...

Cannonball, do you realize how many different sales tax rates there are in Tennessee, much less the entire United States? There is a state sales tax, a county sales tax, and many cities (large and small) have a sales tax. The technology is just coming around to add sales tax based on zip code but they still warn you when you use it that it may be wrong and it is up to the user to verify its accuracy. I have had a internet based business and it is impossible to charge the correct sales tax based on where the customer lived. Also, internet based businesses are a little more capable of competing with businesses overseas. The last time I looked at a category on E-bay there were 241,000 items for sale. When I filtered the results to show US sellers only the number of listing dropped to 57,000 items. That is 184,000 items for sale that no sales tax would be collected on because they are overseas and cannot be forced to collect sales tax in the US much less in Tennessee. Before you make a statement that all internet sales should be taxed understand the way the internet works and who a bulk of the people are that have e-commerce sites. They are from overseas and it just looks like they are in the US. Also on the statement that people over 65 have already paid their share of the taxes and shouldn't have to keep paying, I am 40 and I shouldn't have to pay anymore taxes because there is not going to be anything for me to collect at 65.

February 12, 2011 at 10:14 a.m.
jpo3136 said...

Given the large number of people in our state who hate paying taxes, I think that giving a large corporation a tax break "just because" is a horrible idea.

Perhaps the Governor does not realize that our existing laws put the onus on every individual on the state, as it is, to pay taxes on all internet transactions, regardless of where the retailer is in the world. This is under the "Sales and Use Tax" that's managed by the Tennessee Department of State. Most residents get out of the need to file as their transactions are often below $3500 or whatever that limit is.

This Governor has turned out to be a disappointment in record time. We need answers that are better than a bunch of reactionary running away from problems. He has yet to solve any problems.

He's got to do something other than deny the reality of bills and taxes. The fantasyland approach to budgeting from the Republican party has done nothing but create huge, life-threatening survival problems for many people where there once were none. It's not that hard to face facts about equity.

Governor Haslam: what a disappointment.

February 12, 2011 at 11:16 a.m.
chatttown said...

Disappointing. He gets in and calls for transparent government, then says that government officials should not show where they are getting their money from so when they make backdoor deals no one knows. Second, he wants to cut TN income tax, it only affects people making over $3000 in interest or dividends (@ 3% interest, you got to have 300,000 in the bank to get even a cent of tax), not the middle class the rich. Lastly, now he wants to rob the citizens of tax money, the plant already said they are coming so why give up the NEEDED REVENUE. Good strategy for the future, lets cut taxes, education, public works, police funding, and let the middle class continue to struggle. He is only in it for himself and his rich buddies, shame on him. Also, it is a slap in the face to local businesses that have to collect tax, way to be looking out for your Tennesseans!

February 12, 2011 at 11:56 a.m.
Humphrey said...

it would be smarter to get reduce sales tax across the board - sales tax can be a good thing if you can get tourists and people passing through to pay it - and add a small flat rate income tax for everyone. That would give a more predictable rate of tax revenue, keep the benefits of sales tax and be more fair for everyone of all tax brackets. Relying only on sales tax puts the public good at the whim of spending across state lines.

February 12, 2011 at 1:04 p.m.
diamondr54 said...

The State of Tennessee is having finance problems. We need sales tax revenue, but we also need the jobs. Do we need a state income tax? I say NO!! People that do not work would not pay income tax. We have 3rd and 4th generations that have never worked and the taxpayers keep them up. Internet sales will have to be charged in the States. We have to have sales tax and not put all the State cost on property owners or those that work to survive. Living in the U.S. should not be a free ride at others expense.

February 12, 2011 at 11:17 p.m.
TNCitizen said...

The fact that Amazon employees will pay sales and other taxes in TN is irrelevant to whether Amazon should collect sales taxes on its sales to Tennesseans. All the employees of other bricks-and-mortar stores in TN also pay their taxes and have been paying them for years. Giving Amazon a break is an insult to all the good taxpaying citizens and businesses who already call Tennessee home.

February 13, 2011 at 5:46 p.m.
TNCitizen said...

If Amazon decides not to locate in TN, TN can tax its sales to Tennesseans anyway by enacting a law similar to the one NY adopted 2 years ago. Amazon has been collecting NY sales tax while contesting the law, but it has been upheld in NY Appeals Court.

February 13, 2011 at 5:50 p.m.
chuckhumprey said...

Amazon should really nit be doing that.. But i do agree that further law revisions regarding e commerce and merchant services should be considered..

May 11, 2011 at 11:53 a.m.
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