Gov. Bill Haslam and other state officials are being wrongly vague about whether they intend to exempt Amazon.com from collecting state and local sales tax on sales through the distribution centers that the country’s largest online retailer is building in Hamilton and Bradley counties. Yet one thing about this issue is crystal clear: the company should be required to collect sales taxes on sales routed through its new Tennessee facilities, just as any bricks-and-mortar business must do.
It’s the only fair thing to do. Exempting Amazon would immediately give it a hugely unfair sales advantage of roughly 10 percent over other on-site – if not online – retailers in Tennessee.
While we welcome Amazon.com to Chattanooga, we are well aware that Amazon will wrongly resist collecting and paying sales taxes on merchandise sold – it would say “distributed” – in or from Tennessee. We also suspect that local and state officials, in their fervor to induce Amazon to establish distribution centers in Tennessee, are poised to wink-and-nod their way to giving Amazon permission to ignore the rules – and the state’s legitimate tax-and-revenue needs – that are met by traditional stores.
In effect, they are ready to kiss good-bye an estimated $64 million – including about $8 million for Hamilton County schools – by letting Amazon escape sales tax collections
So let’s be honest. Online retailers, especially the giants of e-commerce like Amazon, Overstock, Sierra Trading Post and Blue Nile, have become hugely profitable national and international retailers by skirting the sales-tax mark-up that virtually every state requires of traditional stores, including the chain outlets of national bricks-and-mortar retailers. This unfair advantage helped Amazon rack up a nearly 30 percent surge in sales in 2008, to $19 billion, while other American retailers suffered two of their worst years in 2008-09 recession.