It’s not often in a political debate that a key argument of one side gets exposed as a complete fraud. This is one of those rare times.
From the beginning of the Amazon.com controversy it was almost universally accepted that giving the company an exemption from collecting sales tax from in-state sales was a bad deal for all our other small retailers that compete with the online giant. And trying to help the economy of one county at the expense of small businesses across the state is simply not fair.
As one state Senator told me, “Frank, you’re probably right about everything but we made a promise that we have to honor.” For the opponents of the Amazon.com deal this has been the hardest objection to overcome even though we always believed that the only promise made was to try to get the tax deal approved by the Legislature. I, and probably most of you, had not seen the tangible evidence of our suspicion until now.
On December 23, 2010, the South Carolina Department of Commerce (DOC) and the South Carolina Coordination Council for Economic Development entered into an Incentive and Inducement Agreement with Amazon.com. Here is article 3.1.3 of that agreement.
3.1.3 Nexus Safe harbor Legislation. Section 12-6-60 of the Code of laws of South Carolina, 1976, as amended (the “SC. Code”), provided that owning or utilizing a distribution facility (as defined therein) within the State would not be considered in determining whether the company has nexus with the State for income tax, corporate license fee or sales tax purposes. However, this provision was repealed for tax years beginning after June 9, 2010. Subject to available resources and to the extent permitted by law, DOC agrees to use its good faith, best efforts to obtain legislation to renew and extend the nexus safe harbor provision.
The State of South Carolina did not “promise” to give Amazon.com the sales tax deal. (Read Cindi Scoppe’s editorial in today’s The State.)
In the competitive world of business recruitment, the contract is everything. If the promise is not on paper and signed, it doesn’t exist. Amazon.com knows that. Commerce knows that. The Senate (which has seen this Agreement) knows that. The House knows that. And most importantly the courts know that.
South Carolina has and will deliver everything we actually promised Amazon.com including the Department of Commerce’s “good faith, best efforts” to secure the sales tax deal. But when the Legislature does the right thing by turning down this request, Amazon.com will still build the distribution center in Lexington County….because that’s what they promised.