published Tuesday, April 26th, 2011

Lieutenant governor opens door to reexamining Amazon deal

NASHVILLE — Lt. Gov. Ron Ramsey opened the door Monday to possibly revisiting the economic recruitment deals the Bredesen administration struck with Internet retailing giant Amazon.com Inc. and manufacturer Electrolux.

Ramsey’s comments came after the state’s former economic and community development commissioner, Matt Kisber, canceled what Ramsey aides characterized as a planned meeting with Ramsey, the Republican Senate speaker.

The purpose was to discuss what commitments former Gov. Phil Bredesen made in the waning days of his administration to lure Amazon to Southeast Tennessee and Electrolux to Memphis.

“I don’t know until I actually look at the agreements and see what the ramifications are for those moving forward,” Ramsey said when asked whether he might change his previous statement that he would “honor” the deals.

“Now obviously,” Ramsey said, “I want to make sure that if there’s something we made an obligation that we uphold that obligation. But if there’s not, then I think it’s worth looking at. That’s all I can say.”

Ramsey said he doesn’t mean to be evasive, noting, “my problem is I don’t know. That why I’m trying to set up this meeting so I would know.”

Ramsey said his main issue is that unlike with previous major employers recruited to Tennessee by the Bredesen administration, the Amazon and Electrolux deals have been “cloaked in secrecy.”

In an interview Monday night, Kisber said he and Ramsey had “played voice-mail tag” for several days and there had been several changes on the proposed meeting. Monday’s had been tentative, he said.

“I think a lot more’s being made out of it than it merits,” Kisber said, adding that he now has private sector responsibilities he has to juggle. He said he remains willing to meet with Ramsey.

Later in the day, the House voted 92-2 in favor of a $106.4 million bond authorization bill that would provide $77 million to Electrolux and another $29.4 million to Wacker Chemical. The state will pay an estimated $64.2 million in interest over the 20-year life of the bonds.

Wacker is building a $1.45 billion plant in Bradley County to produce polysilicon for solar power arrays. It will employ an estimated 650 people.

Meanwhile, House Assistant Republican Leader Kevin Brooks, of Cleveland, indicated he is less than happy that Ramsey, the Republican Senate speaker, and others continue to raise questions about Amazon.

“This deal is done,” Brooks said. “We’re going to turn into South Carolina or Texas if we’re not careful. There’s hundreds of jobs, hundreds of millions of dollars in economic development — and the deal is done.”

The reference to South Carolina and Texas involves sales-tax collection issues that continue to haunt Internet retailing giant Amazon.

Amazon plans to spend $139 million to build two distribution centers in Hamilton and Bradley counties. They would employ between 1,400 to 1,500 full-time workers and ultimately more than 5,000 part-time workers, an Amazon official told local legislators earlier this year.

Democrat Bredesen’s successor, Republican Gov. Bill Haslam, has all but acknowledged the state is waiving requirements that would make Internet retailing giant Amazon collect sales taxes on purchases made by its Tennessee customers.

Tennessee requires retailers with a physical presence in the state to collect and remit sales taxes from state customers. Under U.S. Supreme Court rulings, states cannot compel retailers that do not have a physical presence in a state to collect sales taxes.

Brooks said the difference between “Amazon and other businesses we have given incentives, it’s not apples and oranges, it’s apples and watermelons.”

He challenged someone to “explain to me what we could tax at the Amazon warehouse. It’s not a Wal-Mart. It’s not a Sam’s. It’s not a Costco.”

“This is a distribution center where little boxes come in one end and big boxes go out the other end,” Brooks said. “And there is no cash register. There is no point of sale.”

His reference to Texas involved a situation where state officials sought to compel Amazon to collect sales taxes, arguing a distribution center constituted physical presence. Amazon left the state. A similar argument is taking place in South Carolina, where the state’s former governor recruited Amazon to build a distribution center there.

Haslam told the Chattanooga Times Free Press last week that Bredesen explained the Amazon deal to him before he took office, saying Amazon could just as easily build the centers a few miles away from Chattanooga in Georgia and the state would not collect sales tax in that event either.

But Haslam said Bredesen did not tell him whether Amazon would now be exempted from collecting tax. Haslam said he assumed it did. But Haslam continues to argue that resolving the entire issue of Internet sales tax collections is something that will have to be done at the federal level and not the state level.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550.

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...

Since Amazon is clearly a retailer that will be filling and shipping orders without collecting the taxes owed from Amazon's in-state warehouses, Tennessee should allow any other in-state retailer the same privelege, no more, no less.

No need to reneg on Amazon, simply make the same conditions apply to our long-time loyal retailers that we offer to the big newby.

April 26, 2011 at 1:39 a.m.
rolando said...

What same conditions, nucanuck? There are no "same conditions" in your example.

Would you claim truckers who RON in TN should pay sales tax on the goods in their trucks? Now those are the "same conditions" Amazon has here...their goods merely stay a bit longer than one night...maybe, maybe not. The goods are NOT sold here; they are merely one waypoint among many.

Come to think of it, I'll bet Dalton would be thrilled to have Amazon move its warehouse there...or Alabama.

April 26, 2011 at 7:40 p.m.
nucanuck said...

rolando,

As often occurs, you are simply wrong. Amazon will recieve, package and ship orders from their distribution centers. Since Tennessee has agreed to allow those orders to be shipped without collecting the sales taxes owed, it would only be fair to extend the same conditions to all in-state retail under the same conditions. This would allow existing retail to ramp up their on-line operations and compete on an equal basis.

Surely the great rolando isn't suggesting that Amazon deserves a BETTER deal than our long-time resident retail community?

April 26, 2011 at 9:35 p.m.
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