Haslam: Amazon shouldn't collect tax

Haslam: Amazon shouldn't collect tax

February 12th, 2011 by Mike Pare in News

Staff Photo by Dan Henry/The Chattanooga Times Free Press Gov. Bill Haslam listens to questions as UTC Chancellor Roger Brown looks on during a question and answer session with government officials and local business leaders in the UTC University Center's Tennessee Ballroom on Friday.

Staff Photo by Dan Henry/The Chattanooga Times Free...

Tennessee Gov. Bill Haslam said Friday that Internet retailer Amazon shouldn't have to collect sales taxes because of a new Hamilton County distribution center.

"I don't think because Amazon decides to build a distribution center here, that should change their tax status," he said.

While Tennessee residents are supposed to pay sales tax on items bought through Internet retailer Amazon, few do. Some states have suggested that Amazon should have to pay the tax if buyers don't.

Haslam, speaking after an economic development roundtable with business and political leaders at the University of Tennessee at Chattanooga, said the state "lives off of the sales tax" and that more people are buying goods online. But, he said, it's going to take a national effort to coordinate online sales tax payments from companies to states.

"The larger question is: Should Internet sales be taxable to the state, whether it's Amazon or anything else," he said. "I think all states will have to look at that."

Still, he said, there's a hearing before state regulators on the Amazon tax issue later this month.

"We'll have to see what happens in the hearing there," Haslam said.

Amazon is building 1 million-square-foot distribution centers in Hamilton and Bradley counties. The company plans to invest about $139 million in the centers and create more than 1,400 full-time jobs and more than 2,000 seasonal slots.

However, the online sales tax issue is simmering in several states. In Texas, it boiled over earlier this week, when Amazon said it would close a distribution center and scrap expansion plans after a dispute with the state over millions of sales tax dollars.

Dave Clark, Amazon's vice president of operations, wrote in an e-mail obtained by The Associated Press that the center will close April 12 due to Texas' "unfavorable regulatory climate."

The Texas comptroller's office last year demanded $269 million in uncollected sales taxes from Amazon. The state contends Amazon is responsible for sales taxes not collected on online sales in Texas.

hall tax

In other issues, Haslam said Friday he's willing to study how many people leave Tennessee because of the state's Hall income tax and to look at its effect on older Tennesseans on fixed incomes.

The Hall tax on dividends and interest brings in about $175 million, Haslam said. He said he doesn't know how the state would replace that income, but the issue merits study and should include the estate tax as well.

Lewis Card Jr., vice chairman of tufting equipment maker Card-Monroe Corp., said at the roundtable that he knows of "a lot of folks who are moving to Florida and taking their money with them just to get out of Tennessee" to avoid the tax.

Haslam also said education and economic development are "inextricably linked."

The governor, who visited the Volkswagen and Alstom plants while in Chattanooga, said the operations' factories aren't "our grandfather's world."

"If we don't realize we've got to raise our game in work force development, we'll get left behind," he said.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.