Retailers lash out at Amazon.com tax deal

Retailers lash out at Amazon.com tax deal

September 20th, 2011 by Andy Sher in News

Construction continues on the Amazon distribution center at Enterprise South.

Photo by Jake Daniels/Times Free Press.

NASHVILLE -- Sales by online retailers like Amazon will cost Tennessee as much as $3 billion in revenue and the loss of more than 10,000 jobs over the next five years, according to a new analysis released Monday.

Amazon is building two distribution centers in Southeast Tennessee, one in Hamilton County and one in Bradley County.

The study was commissioned by a national group of traditional brick-and-mortar retailers, ranging from small mom-and-pop stores to giant chains such as Wal-Mart.

"If the state is deprived of the $456 million-plus [annually] in sales tax revenues, there are fewer dollars to provide state services," said Sharon Younger, president of Younger Associates, which was hired by the Alliance for Main Street Fairness to analyze figures from a previous study by the University of Tennessee.

Younger told reporters at a news conference Monday that the figures take into account other jobs lost in the private sector and other tax revenue declines because those who lose jobs will spend less.

The Alliance's Tennessee spokesman, Mike Cohen, said the study underscores the need by Gov. Bill Haslam to revisit the sales tax collection exemption that his predecessor, Phil Bredesen, struck with Amazon to get the giant Internet retailer to locate the warehouses in Tennessee.

The agreement says the company can continue not collecting sales taxes despite having a physical presence in the state.

Tennessee retailers contend that online retailers such as Amazon enjoy an unfair advantage because they do not have to collect state and local sales taxes that range from 7 to 9.75 percent.

Cohen pointed to an agreement Amazon struck earlier this month with California, which says the retailer will begin collecting sales taxes within 12 months, and a similar agreement Amazon has with South Carolina to begin collecting sales taxes within 41/2 years.

While Alliance for Main Street Fairness "applauds" Haslam's efforts, he said, "We hope there's pressure on Gov. Haslam; we hope there's pressure on Amazon to do the right thing and they'll do in Tennessee what they've done in California.

"Do the right thing. Get on a level playing field. Nobody's afraid of competition. ... We just don't want government saying someone can have an advantage."

During the news conference, Nashville businessman Allen Doty, a partner at Cumberland Transit, a bicycle and outdoor recreation store, said he has some customers who visit the store, check out the products, then leave to purchase them online, where they do not have to pay sales taxes.

The Younger analysis does not take into account the $139 million Amazon is spending to build the two warehouses nor the 1,500 full-time employees and estimated 2,000 seasonal employees the company is expected to hire. The company also has plans to open a warehouse near Nashville.

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