Source: The State
Online retailer Amazon won its first legislative skirmish Tuesday as the Senate Finance Committee approved a five-year sales tax collection exemption that is part of the price the company wants to bring 1,249 jobs to the Midlands.Some allies predict the exemption faces a bumpy path to approval in the General Assembly, a forecast that came after the panel endorsed it 15-5.
“It’s a big first step forward,” said Randy Halfacre, Lexington mayor and president of the Greater Lexington Chamber of Commerce. “There’s a lot further to go, but we’ve got someone on first base and that improves your chance to score.”
The proposal would allow Amazon to operate without collecting state and local sales taxes for five years on merchandise it sells to S.C. residents from the 1 million-square-foot center being built near Cayce, scheduled to open this fall.
Amazon spokeswoman Mary Osako expressed appreciation for the panel’s endorsement, adding the company “looks forward to working with the full Senate and House to complete work on the legislation.”
The exemption is opposed by other merchants as giving a competitive edge to Amazon in commerce where pennies count. Buyers, they say, perceive untaxed goods as cheaper.
A group representing Midlands store owners and major chains with outlets in the area promised to keep fighting the proposal.
“We are disappointed with today’s decision, but we believe the Legislature will recognize that this sales tax exemption is unfair,” said Brian Flynn, executive director of the S.C. Alliance for Main Street Fairness. “All online or brick-and-mortar retailers operating in South Carolina should play by the same rules.”
Reinforcements are coming from Tea Party adherents and the South Carolina Policy Council, groups that question any state incentives for new development. Those groups plan to outline their objections today, after not being allowed to outline them to the committee.
The Senate panel endorsed the exemption after state Secretary of Commerce Bobby Hitt said the plan is a “good deal” that will bring in more than it costs.
Supporters estimate state and local coffers will net $11 million annually from payroll and property taxes, after a sales tax break estimated at $2.6 million.
But Sen. Danny Verdin, R-Laurens, said the exemption for Amazon takes development incentives “into another realm” that will be troublesome.
“I’m not comfortable the good outweighs the bad,” he said.
Some senators said coming up with a way to collect taxes owed by Amazon customers will be a challenge.
The growing popularity of online shopping “is a game changer,” said Sen. Darrell Jackson, D-Richland.
Others warned that more than the jobs promised by Amazon are at stake.
Rejection of what Amazon sees as an incentive promised to bring its center here would leave “a horrible black eye” on state industrial recruitment, said Sen. John Courson, R-Richland.
The showdown in the panel came after both sides in the conflict bombarded lawmakers during the past 10 days with ad campaigns uncommon for proposals before the Legislature.
The exemption would be on top of a free site, local property tax breaks on equipment and state job creation tax credits. In addition. Lexington County ended long-time restrictions on Sunday morning sales to facilitate Amazon’s round-the-clock operation.
The next challenge for Amazon allies is winning agreement from Senate leaders to put the measure on a fast track to sidestep a series of procedural obstacles that opponents can use to impede progress before the Legislature ends work June 2.
“There’s no question its path is going to be long and difficult,” said Sen. Nikki Setzler, D-Lexington. “We’ve got a lot of work yet.”