published Friday, October 7th, 2011

Amazon.com’s Tennessee sales tax deal includes over 1,500 new jobs

House Majority Leader Gerald McCormick, R-Chattanooga, speaks about Amazon on Thursday at the Chattanooga Area Chamber of Commerce.
House Majority Leader Gerald McCormick, R-Chattanooga, speaks about Amazon on Thursday at the Chattanooga Area Chamber of Commerce.
Photo by Angela Lewis.
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  • Amazon will collect taxes, hire more Tennesseans
    House Majority Leader Gerald McCormick, R-Chattanooga, announced on Thursday that Tennessee and Amazon have reached an agreement to begin collecting sales tax Jan. 1, 2014. He also announced that the online retailer will add 2,000 more full-time positions across the state.

NASHVILLE — Gov. Bill Haslam announced an agreement Thursday in which Amazon will start collecting sales taxes upon Tennesseans in 2014 and double the company’s distribution centers and workers in the state.

The deal calls for the online retailing giant to build two new centers and hire 1,500 to 1,700 full-time workers to staff them.

That comes on top of Amazon’s current investment in Hamilton and Bradley counties, where the company has spent $139 million on two soon-to-open distribution centers employing 1,500 full-time workers.

Amazon also recently announced plans to open a warehouse in Lebanon, Tenn., with 300 to 500 workers.

But the Alliance for Main Street Fairness, a Virginia-based coalition of mom-and-pop stores and major retailers including Wal-Mart, immediately criticized the agreement. Letting the Internet retail giant wait until 2014 to begin collecting sales taxes is too long, said the group’s Tennessee spokesman, Mike Cohen.

He pointed to the recent agreements Amazon struck with California.

“If Amazon can agree to start collecting the sales tax in one year in California, why should we have to wait one day longer in Tennessee?” Cohen said.

The location of the two new facilities hasn’t been determined, but Middle Tennessee communities including Rutherford and Montgomery counties as well as Loudon County in East Tennessee already are reportedly in the running and are offering various local incentive packages.

As for the deal’s impact on full-time jobs at Amazon’s Southeast Tennessee facilities, Haslam said, “I don’t think there’s anything necessarily envisioned there because of this agreement. It just obviously confirms what they’ve done. Now we’re all in agreement about exactly what Amazon’s agreement is going to be in Tennessee.”

Haslam spokeswoman Alexia Poe said the deal might increase the number of part-time seasonal jobs. Amazon already had announced plans to hire about 2,000 such workers.

When built, the two new centers would bring Amazon’s total investment in Tennessee to about $350 million.

Haslam, a Republican, made the announcement in a news conference where he was joined by Amazon’s vice president of global public policy, Paul Misener.

  • photo
    Construction continues on the Amazon distribution center at Enterprise South.
    Photo by Jake Daniels.
    enlarge photo

The deal changes the original, controversial one struck by Haslam’s predecessor, Democrat Phil Bredesen, in which Amazon would have enjoyed a permanent exemption from collecting sales taxes despite establishing a physical presence in the Volunteer State.

That agreement drew attacks in the General Assembly’s last session from some Republican lawmakers who said it eroded the state’s sales tax base.

Brick-and-mortar retailers said it put them at a competitive disadvantage because they have to collect sales taxes up to 9.75 percent and Amazon does not.

The governor said the agreement “balances meeting the needs of the company and the needs of the state by providing certainty to Amazon and brick-and-mortar retailers in Tennessee.”

“This isn’t a new tax, this tax was already due,” Haslam told reporters following the announcement. “This was just a question of Amazon collecting it themselves.”

Under the agreement, Amazon would begin collecting sales taxes of Tennessee transactions starting in 2014, provided Congress does not act to resolve long-standing issues over tax issues involving online retailers across the country.

“The sales tax issue must be resolved in Congress,” Misener said. “It’s the only way the state of Tennessee will be able to obtain all the sales tax revenue that can be collected for the state.”

Michael Lebovitz, executive vice president for development for Chattanooga-based CBL & Associates Properties, which operates malls nationwide, said the company is “pleased that a compromise is on the table to provide a more level playing field for all of Tennessee’s retailers — whether online or brick and mortar.”

But, he said, “We believe a more reasonable solution would reduce the delay to one year, similar to the agreement reached in California. We hope this will be considered as the discussions progress.”

Haslam said he intends to introduce legislation in the General Assembly codifying the sales tax agreement and it will take effect absent any type of action by Congress.

But Main Street Fairness plans to lobby against the bill, Cohen said.

“If they run a bill, at this point we plan to fight it,” he said.

House Majority Leader Gerald McCormick, R-Chattanooga, said he is confident lawmakers will approve the agreement. The retailers he spoke to Thursday are willing to accept it, he said.

“It was a good compromise,” McCormick said. “I can assure you as majority leader that this is going to pass the House and I think it will pass the Senate as well.”

Earlier in the day, Senate Speaker Pro Tempore Bo Watson, R-Hixson, joined Haslam, Misener and other officials in announcing the agreement. He called it a “win for Amazon and a win for the people of Tennessee.”

State Economic and Community Development Commissioner Richard Roberts told reporters that Amazon’s new distribution centers will be eligible for standard incentives in areas such as infrastructure and job-training grants but no special enticements.

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about Andy Sher...

Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...

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EaTn said...

On line retailers that collect sales tax from our state, one of the highest in the nation, have a 10% disadvantage to others. Folks in Nashville that think sales tax revenue is the future better wake up.

October 7, 2011 at 5:16 a.m.
mrredskin said...

putting aside the issue of sales tax for a minute, what about the increased traffic between knox and chatt? Two lanes each direction isn't going to cut it anymore.

October 7, 2011 at 7:59 a.m.
nowfedup said...

I see NO mention by Nashville of the other tax breaks A is getting, Has anyone plotted out how long it will take, for the "workers" to spend enough to pay back all the tax breaks these folks are getting, AKA how much sales tax will workers pay per year verse how much IN TOTAL has A got, which some might call corp welfare?

Amusing how R's now favor this but when O or D's do anything about business they are accused of "Government picking winners and losers", anyone know whose and how much lobby and campaign money from A, shipping firms, developers , related to this hit TN. Yep glad to see elected in TN are picking "winners and losers", just giving one outfit 10% head start.

October 7, 2011 at 9:51 a.m.

Job creation will benefit the economy hands down. I'm not sure what comparison these jobs will have v/s the tax breaks but, if we do not halt the growing unemployment issue it won't matter. New jobs will cause a great impact on the market sooner than later. Yes we may be putting off some revenue till 2014. but when unemployed people start getting they're feet under them again they will invest into the system again.

October 7, 2011 at 1:38 p.m.
rolando said...

I love to hear these retailers whine and cry like babies about a little competition. WalMart certainly didn't worry about all those mom and pop corner stores they put out of business by selling cheaper. BestBuy didn't care about all the small retailers -- like Rex -- that they put out of business, either.

Yet they are the first to whine when they see something that isn't going to happen. They hire all these lobbyists to whiz about the country spouting half-truths and misleading people.

These whiny retailers were doing business with us long before Amazon started building a distribution center here. Those whiners were competing then too, and doing just fine. So their gripes that Amazon being here will affect their sales is just plain Bulls--t. It isn't as if they are going to have an actual retail store here...these whiners know that, too...they just like whining because the economy has tanked their sales and people are looking online for better deals.

Tell you what, whiners, you start pricing your products to match Amazon's prices and include free shipping as they do, and I will buy from you. The convenience of buying and taking home immediately is sometimes worth a little extra, to say nothing about the advantage of instant customer service/return/repair.

Sometime the extra customer service doesn't matter -- I bought SS tubular steps for my truck online for $250 +- delivered. Locals wanted $425 for the exact same product. Don't whine about "they have no overhead" because WallyWorld sure as H had less overhead and bought cheaper than mom and pop could...but they didn't care.

Well, today I don't care about the whiners...it is called good business.

October 7, 2011 at 10:33 p.m.
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