(Note: Expands and replaces earlier post)
By Eric Schelzig, Associated Press
NASHVILLE, Tenn. — Gov. Bill Haslam announced Thursday that he has reached a deal with Amazon.com for the online retailer to begin collecting Tennessee sales tax in 2014 and add 2,000 full-time jobs at two new distribution centers.
Amazon said it will invest $350 million in Tennessee over the next three years. The sites of the new distribution centers have yet to be decided.
Haslam said he will introduce legislation next year to solidify the deal, in keeping with a state attorney general’s opinion issued this week that the executive branch can’t unilaterally waive tax collection requirements.
“This isn’t a new tax, this tax was already due,” Haslam told reporters after the announcement. “This was just a question of Amazon collecting it themselves.”
Amazon.com Inc. was granted an indefinite waiver on collecting state sales taxes as part of a deal that led to the company’s first distribution centers in Tennessee. Amazon had previously announced it will employ more than 1,500 workers full time at Tennessee facilities in Cleveland, Chattanooga.
The company will hire up to 500 more full-time workers at a facility in Lebanon, and 1,500 more at the new distribution centers, Haslam said.
The governor said he expects the two new distribution centers to be closely located to each other. Economic and Community Development Commissioner Bill Hagerty confirmed the new Amazon facilities are the same “Project Tango” for which several counties have been proposing tax incentives in hopes of luring the investment to them.
Amazon lobbyist Paul Misener said the company will continue to push for a federal sales tax law to cover all online retailers.
“The sales tax issue must be resolved in Congress,” he said. “It’s the only way the state of Tennessee will be able to obtain all the sales tax revenue that can be collected for the state.”
Haslam estimated that Amazon accounts for about 10 percent of forgone sales tax revenues from online sales.
The original Amazon tax arrangement was struck by then-Gov. Phil Bredesen, a Democrat, and was OK’d by Haslam, a Republican, before he was sworn into office in January.
Retailers with Tennessee stores that must collect sales tax quickly opposed the deal, saying it gives Amazon an unfair advantage. Lawmakers raised concerns about eroding Tennessee’s revenue base, which depends heavily on sales taxes.
Haslam had walked a political tightrope on the Amazon deal by both claiming to honor Tennessee’s economic development commitments while also trying to revise the arrangement. A Republican bill that would have forced Amazon to collect sales taxes was delayed after the governor said it would be “disingenuous” to renege on the deal.
Pressure to come to better terms increased after Amazon agreed to begin collecting state sales taxes in South Carolina and California in the coming years.
The governor said he doesn’t regret agreeing to the original terms despite the changes.
“The world has changed since that point in time,” Haslam said. “They’ve agreed to expand and build a bigger presence, the national situation has changed, our Legislature weighed in with a voice.”
Seattle-based Amazon has been spending heavily on expansion. When it reported earnings on July 26, the company had announced plans to build 15 new order-filling centers and said it expected to expand further.