Amazon Plays Hardball With South Carolina
1:00 pm
Thu April 14, 2011

Amazon Plays Hardball With South Carolina

Amazon.com is increasing its pressure on South Carolina lawmakers to grant it a tax exemption. The online retailer has put hiring on hold for a distribution center it plans to open this fall near Columbia.

Amazon has hinted it won't move ahead unless lawmakers deliver the tax incentive promised by former governor Mark Sanford, even though he didn't have that authority.

Amazon is known for playing hardball when it comes to sales tax. Texas, Tennessee and many other states have grappled with the same demand Amazon has made of South Carolina: make our sales tax-exempt in your state or we won't set up shop.

"The issue right now is that every state wants to create jobs," says Neal Osten of the National Conference of State Legislatures.

Amazon has promised to hire more than 1,200 people at a new distribution center in South Carolina. Just this week it posted management positions for hire, but put the job listings on hold yesterday, as opposition to the sales tax exemption intensified.

A handful of SC lawmakers have now filed a bill to grant Amazon's wish. But Governor Nikki Haley says she doesn't like the idea of giving any company special treatment. Still she says she won't renege on a promise made by her predecessor and will pass the bill if lawmakers pass it.

Many lawmakers agree with Haley and are less inclined to offer Amazon an unfair advantage over retailers like Guy Jones. He runs a paddle sports store in Columbia called River Runner.

"Customers come into your store with smart phones and quickly can find - often - a cheaper option to buy it online," says Jones. "That's okay, as long as we're on a level field in terms of tax collection."

A kayak for sale in Jones' shop could be $50 cheaper on Amazon merely because the site doesn't have to charge sales tax for South Carolina residents. Federal law only requires retailers to collect sales tax from customers where they have a physical presence in the state.

South Carolina has already promised Amazon a property tax break, but the sales tax exemption requires legislative approval.

Amazon did not return our call, but a company official made clear in a statement to The State newspaper the hiring process will remain on hold, pending action from state legislators.

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