The decision by Amazon.com, the world's biggest Internet retailer, to build two huge distribution centers here marks another milestone for economic development prospects and job growth in Southeast Tennessee. The deal wasn't easily achieved, but it will not go unnoticed among business recruiters and companies scouting for good locations to build new plants and facilities.
State and local officials were in negotiations with the Seattle-based company for months. In the end, it took an array of state and local tax incentives to secure the deal, a land swap by Volkswagen at the Enterprise South industrial park, and a commitment from county governments in both Hamilton and Bradley counties to move quickly to clear sites for the company's new centers in each county.
In fact, site surveys were done and earth-moving equipment was already at the Enterprise South site moving dirt for a $48.1 million distribution center there when Amazon.com officially announced its decision Monday.
Amazon's commitment also apparently hinged on core transportation infrastructure, proximity to Southeast markets and a resolution, yet undisclosed, regarding state sales tax collections. Amazon.com apparently won that negotiation. Fred Kiga, director of policy for the company, said previously that the company's plant here was not as a retailer, but rather a shipper.
Sara Jo Houghland, a spokeswoman for the state's Department of Revenue, told this newspaper's Mike Pare that retailers with "a Tennessee nexus" are required to collect the state's sales taxes. If they don't, she said, the purchaser is obliged to report and pay the tax. Every online purchaser knows how that works, or more to the point, how it doesn't work.
In fact, it's hard to imagine online purchasers voluntarily reporting their purchases, figuring up the tax, and sending the state a check. In reality, the state, always anxious to secure jobs, blinked on the issue. We're not criticizing the state for letting the sales tax collection slide, but it owes taxpayers a candid, transparent statement.
Amazon.com collects sales taxes in only a handful of states. Its general procedure is that it doesn't collect taxes on most of its sales in Tennessee and 44 other states.
If Tennessee had bucked the company on that issue, it likely would have built its distribution centers elsewhere -- and Tennessee would have lost more than 1,400 full-time jobs and another 600 seasonal jobs.
In fact, the sales tax issue for Internet businesses has been in play in Congress for several years. Congress generally has given the Internet industry a free ride on the matter for an interim period to let online retailers get established. The issue, however, begs a uniform national policy. It will haunt Congress as more brick-and-mortar retailers, which pay or collect a range of taxes, are forced by high-volume Internet competition to shave their profit margins or close their doors altogether.
That issue aside, Amazon.com's presence here, like the billion-dollar-plus plants established or planned by Alstom, Volkswagen and its supplier plants, and Wacker Chemical, is strategically important. It enhances the economic momentum that is already under way. Together with EPB's Smart Grid technology and nation-leading high-capacity, super-fast fiber-optic network, it also reinforces the city's lure for Internet-based companies. Chattanoogans can be glad for the increasingly brighter prospects for job growth.