published Friday, April 22nd, 2011

Senate speaker questions Amazon deal

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    Senate Speaker Ron Ramsey speaks to reporters in his office in Nashville, Tenn., on Tuesday, March 22, 2011. (AP Photo/Erik Schelzig)

NASHVILLE—Republican Senate Speaker Ron Ramsey said Thursday he will meet with the state’s former jobs chief in an effort to learn what deals former Gov. Phil Bredesen’s administration struck when recruiting Amazon and Electrolux to Tennessee.

“This whole Amazon tax issue, that they’re not paying sales tax, I just don’t think that’s something that should ever have been agreed to — apparently it’s agreed to,” Ramsey, R-Blountville, told reporters.

“I think those types of programs in the future are going to be looked at very closely before we do it again,” he said.

Ramsey, however, repeated earlier statements he has made that “we’ll honor it.”

He said Matt Kisber, the former economic and community development commissioner, has agreed to meet with him next week.

“I want to know what did we agree to, what’s in writing, what’s not in writing,” Ramsey said.

Efforts to reach Kisber were unsuccessful. Earlier this week, attempts were unsuccessful in reaching Bredesen about the Amazon deal.

Amazon is spending $139 million to build two distribution centers in Hamilton and Bradley counties that will employ an estimated 1,400 to 1,500 full-time workers and, ultimately, Amazon has said, more than 5,000 part-time workers.

But the Internet retailing giant’s refusal to collect state sales taxes from its Tennessee customers and remit it to the state — a national policy of the firm — has triggered protests from state-based retailers who do.

Democrat Bredesen’s successor, Republican Gov. Bill Haslam, told the Times Free Press earlier this week that he is satisfied with Bredesen’s personal explanation about the Amazon deal.

Haslam recalled that Bredesen told him that Amazon “can either build in Chattanooga or they can go nine miles away in Georgia and do the same thing” and that in “either one of those cases they’re not going to be collecting the Tennessee state sales taxes.”

U.S. Supreme Court decisions have held that states cannot compel out-of-state retailers with no physical presence in the state to collect and remit sales taxes.

Amazon officials have stressed that the distribution centers should not count as physical presence in the state because Tennessee customers will not be able to pick up or return merchandise at the centers. The centers are about distribution and not sales, they argue.

Another last-minute deal struck by the Bredesen administration involved assistance for Electrolux, which is building its North American Cooking Products manufacturing center in Memphis.

Haslam learned after taking office that the Bredesen administration committed to providing $92 million in cash plus other incentives for the factory.

On Wednesday, Haslam and his commissioner of economic and community development, Bill Hagerty, announced a new approach that focuses less on trying to attract outside companies to Tennessee.

They said the “vast majority” of new jobs in Tennessee over the past 10 years were created by existing businesses. Hagerty’s figures showed that 85.6 percent of all jobs were expansions of existing Tennessee businesses. Another 13.2 percent came from newly created businesses.

Relocations accounted for only 1.2 percent. Of department-announced jobs, 27 percent came from relocations and 73 percent came from expansions.

“We have a finite amount of staff and time,” Hagerty told Times Free Press reporters and editors. “Our thought was we need to find those sectors where we have the greatest likelihood of having a competitive edge ... and get a higher return on our time.”

He contended there has been a “disproportionate focus on relocations relative to actual job growth.”

Ramsey said the figures were among the “most telling statistics.” He said he is “absolutely elated that [Halsam and Hagerty] are ... trying to help existing businesses.”

The Haslam administration figures do not look at job creation during the period from 2008 on when Bredesen made scored his greatest recruitment victories.

The speaker also was dismissive of job tax credits the state has used to lure manufacturers such as Volkwagen to Chattanooga and Wacker Chemical to Charleston, Tenn., in Bradley County.

“I”m just not big on tax credits when it comes to recruiting and growing businesses,” said Ramsey, noting he never thought about such issues in starting three small businesses. “It’s all about setting the atmosphere.”

Meanwhile, approval of state FastTrack funding for Amazon and several other projects got held up last week in the State Funding Board. State Comptroller Justin Wilson, Treasurer David Lillard and Secretary of State Tré Hargett questioned how much money the state had for such projects.

The Bradley County center is to slated to see $2.2 million for state infrastructure assistance and $100,000 for worker training.

Amazon’s Hamilton County operation is expected to receive $4 million in infrastructure assistance and $599,500 in job training.

Officials said they expect to meet later and approve the funds.

about Andy Sher...

Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...

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nucanuck said...

Amazon doesn't create more retail sales or more jobs. Amazon is an efficient retailer that wins customers from existing stores and in so doing will eliminate more US jobs than it creates. Maybe that is a good thing , maybe not, but their tax collection status should not give them further leverage to beat down their competition.

Tennessee retailers should stop collecting sales tax the day Amazon opens their warehouse for shipments. The state would then quickly find an equitable solution for the firms that have served Tennessee over the years and are now being thrown under the bus.

April 22, 2011 at 1:58 a.m.
inquiringmind said...

Hey, I thought this guy was a republican. Aren't all taxes are bad?

The more high end business TN brings into the state the more will come and the tax base will rise. TN ought to completely get rid of the sales tax and go to a flat rate income tax with no deductions.

April 22, 2011 at 8:01 a.m.
danielgibson said...

It certainly is quite questionable how Amazon is able to evade paying state taxes and continue to receive incentives for the factory. I think those funds can be used to help local businesses who might be burdened by taxes and unable to compete with the giant. This is certainly something which the leadership of multiple parties in the government and amazon has to come to an agreement with.

May 17, 2012 at 3:30 a.m.
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