On Thursday Tennessee Governor Bill Haslam announced that Amazon, which recently opened two distribution centers in the state, will be required to collect state sales tax beginning January 1, 2014. This compromise was reached as a way to bring new jobs to the state, address the concerns of traditional brick-and-mortar retailers, and provide increased revenue (albeit delayed) to Tennessee. Amazon anticipates that the new distribution centers, which currently employ 1,500 workers, will soon add an additional 2,000 full-time positions as well as numerous part-time and seasonal jobs.
Amazon’s recently-constructed distribution centers brought controversy to Tennessee’s legislature. House Majority Leader Gerald McCormick, who worked with other legislators to oppose allowing Amazon to construct the centers without immediately requiring the online retailer to collect sales tax, recognized Governor Haslam’s successful compromise:
“This is the best possible solution because it balances job creation for our citizens with tax policies that provide a level playing field among online and bricks-and-mortar retailer. I’m proud to have played a small role in protecting Tennessee jobs, especially new jobs for southeast Tennessee.”
When the state reached a deal with Amazon to construct the first distribution center, the online retailer was granted an indefinite waiver on the collection of state sales tax. Thus, many traditional Tennessee brick-and-mortar retailers opposed the physical presence of Amazon in their state, believing the option of sales-tax free shopping would give Amazon the upper hand with consumers. Although Amazon will be required to collect Tennessee sales tax in less than 15 months, the online retailer still offers Tennessee residents two more tax-free holiday seasons.
In an uncertain economic climate, states are eager for ways to provide stable jobs, even if it means temporarily sacrificing revenue. Although Tennessee residents will soon be required to pay sales tax when ordering from Amazon, the convenience of online shopping and competitive prices will continue to have a strong allure.
[Sources Include: The Seattle Times & Chattanooga News]
