Amazon deal turns into headache for lawmakers

Haley questions tax break that landed business center

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COLUMBIA --- The Amazon.com distribution center that became one of former Gov. Mark Sanford's last big economic development deals has become a headache for Gov. Nikki Haley, legislators and possibly South Carolina's economic development image.

Gov. Nikki Haley said the deal could hurt the state in luring other businesses.   Associated Press
Associated Press
Gov. Nikki Haley said the deal could hurt the state in luring other businesses.

Haley is questioning a sales tax break for Amazon that legislators don't want to touch -- and that Amazon's retail competitors say is unfair.

Amazon is building a $100 million warehouse facility and creating 1,249 permanent jobs to handle orders from around the region. It will begin operating before Christmas and join at least 52 distribution centers the company already has to move goods ordered online.

In an interview Friday, Haley said she still hasn't gotten to the bottom of sales tax promises made to Amazon.

"It's a tough situation," she said. "I've had to take on all these issues where I've had to check: What's the background on this? How did we get here? What happened?"

IN 2005, SOUTH CAROLINA legislators passed a bill that helped lure a warehousing operation for cable TV retailer QVC to Florence. The legislation made it clear that big distribution centers didn't open out-of-state businesses to sales tax collections just because they shipped goods from South Carolina. Sanford signed the legislation, and QVC held its grand opening in 2007.

The law expired in June. QVC did not respond to questions, including whether its sales are now subject to South Carolina sales tax. The state revenue department said it could not discuss specific questions about QVC.

Amazon also did not respond to requests for comment.

The state Commerce Department's dealmakers promised Amazon that they would work to get the law back on the books -- but with a new exception for Amazon. The company operates Createspace, a book publishing operation in North Charleston. Amazon wanted to make sure Createspace also did not have to collect sales taxes.

Small and large retailers say that a major competitor such as Amazon shouldn't get breaks and that QVC's break should remain dead.

"We would like for that to be off the table completely," said Jill Hendrix, who owns Fiction Addiction, a Greenville bookstore, and is a member of the Southern Independent Booksellers Association board.

State incentives to lure companies and jobs are fine, Hendrix said, because they generally help build businesses for everyone. A sales tax break, however, gives competitors something consumers see as a discount and can cost her business, she said.

HALEY SAID THE Amazon sales tax break can create a bind for the state as she tries to recruit businesses.

"I don't want us to be known as the state that doesn't keep our promises," she said. "But the second side of it is when I go and I push for economic development, I want to make sure that we're being fair to the companies that are coming in and to the companies that we already have in this state."

She said Amazon's publishing business makes it different from QVC and others that have only warehouse or distribution operations.

So far, Commerce Department officials haven't convinced legislators as they try to deliver on the Amazon deal.

House Majority Leader Kenny Bingham said he is unclear about the sales tax exemption being a needed piece of legislation. The Cayce Republican's district is in Lexington County, where the warehouse is being built.

"I've been approached also by those people who believe they compete with Amazon, and they feel it's going to be an unfair advantage for Amazon," he said. "As a result of that, I'm unconvinced that it is the right thing to do."

House Speaker Bobby Harrell, a Charleston Republican, is not seeking co-sponsors for any legislation that would provide the exemption, Harrell spokesman Greg Foster said.

Amazon's sales tax fights

South Carolina isn't alone in Amazon sales tax fights. The company has stopped working with affiliates in Rhode Island and Colorado because of collection-enforcement laws passed in those states. Virginia is among other states that do not require the company to collect sales taxes.

Earlier this month, Amazon said it would close a distribution center near Dallas and scrapped plans to expand elsewhere in Texas in the midst of a sales tax dispute.

Texas said Amazon owed $269 million in uncollected sales taxes, a figure the retailer disputes. Amazon said it would shut down its center because Texas has an "unfavorable regulatory climate."

-- Associated Press

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WorkingClassHero
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WorkingClassHero 02/28/11 - 10:29 am
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More Corporate welfare I see.

More Corporate welfare I see.

justthefacts
22677
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justthefacts 02/28/11 - 10:46 am
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Working, I don't think you

Working, I don't think you grasp the issue. Perhaps you could reread it.

WorkingClassHero
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WorkingClassHero 02/28/11 - 10:59 am
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I see very well justthefacts.

I see very well justthefacts. Corporatists have the entitlement mentality that they are free from all taxes. Just pass the taxes onto the working people of this country. Amazing, we pay taxes so the rich don't have to.

justthefacts
22677
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justthefacts 02/28/11 - 12:11 pm
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Working, never mind. You rant

Working, never mind. You rant does not apply to above article, but whatever....

follower
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follower 02/28/11 - 04:37 pm
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Justthefacts, isn't it

Justthefacts, isn't it frustrating?

termite
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termite 02/28/11 - 10:01 pm
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It's the greedy at it again.

It's the greedy at it again. They never get enough.

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