Amazon.com wins round 1

The Senate Finance Committee room was packed yesterday by Lexington County supporters of Amazon.com’s request to be exempted from collecting sales tax for sales made to South Carolina residents in exchange for building a new distribution center in that county. The room was also filled with lobbyists hired by Amazon.com to move its legislation forward.

In the end, as expected, the Committee voted 15-5 in favor of by-passing the subcommittee process (that would give the public a chance to voice their opinion) and sending the bill to the Senate floor. In addition to the Senator’s representing Lexington County sponsoring the bill, the Committee’s chairman also added his name and an amendment to give QVC in Florence County another five year corporate income tax pass. It’s hard to vote against the Chairman in this situation so hats off to the five courageous Senators who did.

Below is my letter being delivered to one of those courageous Senators, Danny Verdin. The fight for small businesses goes on.

------------------------------------------------------------------------------------------------------------

April 20, 2011

The Honorable Danny Verdin
South Carolina Senate
404 Gressette Building
Columbia, SC

Re: S.808, Sales Tax Collection Exemption for Amazon.com

Dear Senator Verdin,

Thank you for your insightful questions at yesterday’s Senate Finance Committee regarding the above referenced bill.

You correctly asked what the original motivation was for Amazon.com to demand that it be exempted from collecting sales tax on sales made to South Carolina residents. The answer can clearly be found on page 14 of Amazon’s 2008 Annual Report (see enclosed).

In that report Amazon.com lays out why it must have an exemption from collecting state sales tax.

A successful assertion by one or more states or foreign countries that we should collect sales or other taxes on the sale of merchandise or services could result in substantial tax liabilities for past sales, decrease our ability to compete with traditional retailers, and otherwise harm our business.

We don’t often have such an honest admission from big businesses for the incentives they seek. However, their openness does not change the fact that granting their demand is unfair to all the state’s small businesses, brick-and-mortar and online, that would be competitively disadvantaged.

While we appreciate the issue of trying to uphold an offer made in negotiations with Amazon.com, this is a particularly unique case that, we don’t believe, will shut down the state’s efforts to recruit businesses utilizing more routine incentives.

Sincerely,

Frank Knapp, Jr.
President & CEO