Haslam waives state law to give Amazon sales tax exemption

Gov. Haslam said this week that Amazon will receive a special exemption from the state law requiring businesses with a physical presence in the state to collect the sales tax. The decision was made in private negotiations and the terms are not being released to the public. The deal means the state will lose at least $30 million in much-needed revenue at a time when the state budget has already been slashed for public services like TennCare, higher education, and pre-K programs.
The deal also means that small businesses, representing 95% of Tennessee employers, will be hurt even further in the midst of an ongoing national recession. Small businesses are required to collect the state sales tax (the highest in the nation), and already lose business to online and out-of-state competitors who have lower (or no) tax rates. Now the state has handed our small business's biggest opponent, online retail giant Amazon, another competitive advantage.
Haslam has said the 1,200 jobs Amazon says it will create are worth the $30 million in lost revenue. Those 1,200 employees would have to generate $25,000 each back into the economy every year to make up for the revenue, and it's questionable that employees at a warehouse will be paid sufficiently to do that.
Lt. Gov. Ron Ramsey even spoke out against the deal, telling Memphis's Commerical Appeal: "Infrastructure, providing training through community colleges -- I usually agree with those. It's the one where you make an outright gift or do a sales tax exemption that no other business in the state has, those are the type of things that bother me," Ramsey said.
"This whole Amazon tax issue, that they're not paying sales tax, I just don't think that's something that should ever have been agreed to," he said.
TFT supports the Out-of-State Sales Tax Act (SB 1498/HB 1912) sponsored by Sen. Marrero and Rep. Stewart. The bill would override this exemption by requiring any online or out-of-state vendor selling more than $4,800 of goods in Tennessee annually to collect and remit the state sales tax on items sold. The bill would raise $100 million in additional revenue and improve the climate for our small businesses to thrive.
In addition to the lost revenue and catering to private interests over the public good, the Amazon deal stinks because of the lack of transparency in the negotiations. A public hearing on the Amazon exemption was initially scheduled in February, but quickly cancelled and never rescheduled. Instead of letting the public weigh in on the issue, a backroom agreement was made between a few administrators and Amazon representatives. Unconscionable.
TFT supports the small business owners who have spoken out loudly about the injustice of this deal, and we will stand with them as we fight for greater transparency and accountability in government negotiations with private corporations. We also stand in solidarity with groups like UTK's Progressive Student Alliance who spoke out on campus April 25 to protest budget cuts to higher education and advocate for revenue options like the one Gov. Haslam threw away in negotiating with Amazon.