The editorial below is from the Spartanburg Herald-Journal.
Sunday, April 24, 2011
Imagine you own a small retail business. You’ve been selling books, cameras, auto parts or some other product for years. You’ve earned your clientele, paid your taxes and hired local employees.
In the process of building your business, you’ve helped build your community. But now you face a new competitive challenge. It isn’t another store nearby or across town. It isn’t even a big-box retailer backed by a huge national company. Your competitor isn’t located in your town at all. It’s on the Internet.
You find out your customers are buying from this online retailer because its prices are so low. They’re low because the Internet business has so little overhead, doing business internationally out of just a few locations. Plus, the online retailer doesn’t charge sales tax the way you must. You even learn that some people are coming to your store to check out various products and ask advice and then ordering those products online.
Then, you find out your state government is planning to use the taxes you pay to convince the online retailer to come to your state. The state is giving your competitor many incentives. At least, you think, once your competitor comes to your state, it will have to collect state sales taxes, leveling the playing field. But then you learn your state lawmakers are considering giving your competitor another benefit, letting it sell within the state without sales taxes.
Why, you wonder, is your state using your money to help your competitor drive you out of business?
It’s not a hypothetical situation. It’s the situation retailers across the state find themselves now that state officials are giving away incentives to lure an Amazon.com distribution center to Lexington County. They are considering exempting Amazon from collecting sales tax on in-state transactions.
Amazon sells just about everything, so it competes with most retailers. It competes with the businesses that make up the Main Streets of South Carolina. Amazon is promising to bring 1,200 jobs to Lexington County, but it competes with the businesses that employ thousands of South Carolinians statewide.
Why should Amazon be exempt from collecting state sales taxes while other retailers in the state are forced to collect the tax? Why should the state give an unfair competitive advantage to this new company at the expense of the other businesses in South Carolina?
There isn’t a good reason. Gov. Nikki Haley, who has tried to stay on both sides of this controversy, says she doesn’t want the state to break its promise to Amazon. That promise never should have been made. And whoever made it did not have the authority to change state law to make it happen.
This issue wouldn’t be a problem if Congress had acted like it should and forced all Internet retailers to collect state sales taxes on all transactions. As it is, only online retailers with a physical presence in a state have to collect sales taxes for that state. There’s no reason for South Carolina to compound this inequity by giving Amazon an enhanced competitive advantage once it comes to South Carolina.
If thats what’s necessary to lure Amazon to the Palmetto State, it isn’t a good enough corporate citizen for us to want it here.