Amazon.com's deal to begin paying state sales tax in California as early as September 2012 has increased pressure on Tennessee Gov. Bill Haslam to renegotiate that state's deal with the company. Under Haslam's predecessor, Tennessee agreed to exempt Amazon from sales tax if it built two warehouses in the state, something the company has also agreed to do in California.
The loss of jobs and wages in the study is significant, and finds that the impact of online sales, would “also trigger losses of other types of state tax revenues as spending on taxable items such as gasoline, alcohol, tobacco, and amusements decline. Revenues from taxes and fees on businesses would also decline as businesses downsize due to reduced consumer spending.”
Tennessee depends on state sales taxes to provide for basic services including the salaries for teachers, police, firefighters and other first responders.
“Perhaps worst of all, the sales tax loophole gives Amazon a huge advantage over existing merchants, who do collect and pay taxes,” said Mike Cohen, spokesperson for the Alliance for Main Street Fairness (ASMF) in Tennessee. “The Younger study is further proof that the Amazon deal is bad for existing Tennessee merchants, and our local and state governments. It may be good for Amazon, but it's bad for everyone else.”
“While we are glad to hear that Amazon has agreed to collect sales taxes just like every other business in California, we need action now in Tennessee,” said Cohen. “We hope Governor Haslam can get Amazon to do in Tennessee what they now have conceded they are willing to do in California, which is play by the same rules as everyone else.”
