published Monday, September 19th, 2011

Deal with Amazon should be honored

There’s room for debate on what incentives should be offered to companies that are considering setting up shop in a given state. But once a state agrees to provide certain incentives, it should stand by the deal.

Former Tennessee Gov. Phil Bredesen struck a deal with Internet retailer Amazon that in exchange for building job-creating “fulfillment centers” in Hamilton and Bradley counties, Amazon would not have to collect sales taxes on its Tennessee transactions. Current Gov. Bill Haslam has said he will honor that deal.

But now that Amazon is invested in the state, there is talk in the General Assembly of instead giving Amazon only a one-year sales tax break.

That’s a bad idea. It would be perilous to Tennessee’s reputation if word got out in the national — and international — business community that our state does not firmly stand by its agreements. Companies would have reason to look elsewhere when they are deciding where to build.

It is fine to debate whether sales tax exemptions should be offered in the future to companies that are considering building in Tennessee. And we do not fault Haslam for asking Amazon to consider voluntarily collecting the sales taxes.

But as House Majority Leader Gerald McCormick, R-Chattanooga, told the Times Free Press, “I think the state is obligated to keep its promises on the original deal if that’s what Amazon chooses to have us stick to.”

Well said, Rep. McCormick.

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