Published April 15, 2011 in The Times and Democrat
S.C. House Minority Leader Rep. Harry Ott, D-Calhoun, said Thursday he believes Amazon.com will get the sales tax exemption it’s pushing for, but probably not the five-year exemption State Sen. Nikki Setzler, D-Lexington, is proposing. Ott made the observation in The State on Thursday after Amazon began tightening the screws, announcing a job freeze for 11 management positions for the distribution center it plans to open near Cayce.
The move came as legislators scrambled to deliver the tax exemption former Gov. Mark Sanford promised the company.
Setzler’s bill would allow South Carolina to recoup the deferred tax revenue if Amazon fails to deliver on the more than 1,200 jobs it has promised for the distribution center. The proposed bill stipulates the sales tax provision would also expire if Congress were to pass a law requiring online retailers nationwide to charge and collect sales tax.
Opponents of the tax break cite the unfair edge it would give Amazon over its retail competitors. Of the top 10 retailers doing business online – a list that includes Wal-Mart Stores Inc., Staples Inc., Dell Inc. and Apple Inc. – only Amazon does not routinely collect sales taxes.
Proponents of the exemption say it’s worth the trade-off to land a project that could eventually provide as many as 3,000 jobs and pump an estimated $61 million annually into the state’s economy.
Gov. Nikki Haley has said she doesn’t agree with giving the company the tax exemption but has promised not to veto the incentive if it passes the Legislature.
Haley should practice what she preaches when it comes to supporting small businesses by actively working to deny the exemption. In an interview a year ago, she told The Associated Press she didn’t like big breaks for big companies when there were plenty of small businesses that needed help. “Don’t turn around and bring a company in that says either you give this to me or I’m not coming, knowing that they’re going to take from your other South Carolina businesses,” Haley said at the time.
We think it’s wrong to give Amazon a competitive edge over other big online retailers and over the small businesses that have real roots in this state. Economic development experts are always quick to point out that a community’s economic health depends on the health of its existing businesses, and South Carolina should put their interests first.
The S.C. Small Business Chamber of Commerce has also stated its opposition to the proposed sales tax exemption. On its website, the group notes that the other incentives the state is providing, such as $4 million in free land, a $3,200 state tax credit for every worker hired, reduced property tax and no corporate income tax, should be sufficient for Amazon.com to stick with its plan to build the Cayce distribution center.
The Small Business Chamber made other points worth considering:
* If economic development officials have been told by Amazon.com that it will not build if it does not receive a sales tax exemption, then they need to tell the public and explain why they are willing to encourage shoppers to purchase from a big business with deep pockets at the expense of our struggling small businesses.
* An Amazon.com distribution center is not necessarily going to be a longtime employer in Lexington County. This is not a corporate headquarters setting up community roots. The facility is not a manufacturing plant like Michelin that will have decades of use and a skilled labor force, thus tying the corporation to the area for many years to come. While a distribution center is nice, it can be replicated in any state once the immediate benefits (incentives) have been exhausted.
The group also makes the point that the sales tax exemption issue impacts every small business and taxpayer in the state.
“While the immediate economic benefits will be to the West Columbia and Cayce communities, including some small businesses, the sales tax exemption will be paid for by every small business (brick-and-mortar and otherwise) in the state that will lose a sale because Amazon.com can charge 6 percent less if it does not have to add a sales tax,” the Small Business Chamber notes on its website. “It will be paid for by every parent in the state that will have less state funds going to their child’s school because a sales tax is not being collected (and most likely not being reported by the Internet purchaser). It will be paid for by South Carolinians from Seneca to Bluffton.”
We join with the Small Business Chamber in encouraging Amazon.com to “drop its demand for a sales tax exemption, declare victory for all the other incentives it is receiving and deliver on its promise of economic development …”
Yes, South Carolina needs more jobs. But it also needs good corporate citizens willing to fulfill all of the responsibilities that come with doing business here.