Thursday, April 28, 2011

Amazon packing after House vote in SC

It appears that SC had a law on the books that exempted companies from collecting sales tax on out of state sales. This law was enacted to lure the QVC distribution center to Florence. The law expired in June of last year. Promises were made to Amazon to lure them to build in Cayce, but this vote seems to negate the sales tax exemption they were counting on.

Amazon's case seems to be muddled a bit because they have a publishing company in Charleston that somehow is part of the initial agreement. This may be the sticking point.

When you are talking about a nationwide distribution center, I can see not applying the sale tax to out of state shipments. The publishing company is another story. It seems to me a bill could be drafted to accommodate all parties and keep the deal intact. However, Amazon is a big company with many millions of dollars more at stake than the $100 million cost of the building. If SC is thought to be unfriendly, there are plenty of other states that will battle for the new distribution center and jobs. SC's loss is another state's gain.

Online retailer cancels contracts, job postings for Cayce site.

Amazon all but told South Carolina goodbye Wednesday after the online retailer lost a legislative showdown on a sales tax collection exemption it wants to open a distribution center that would bring 1,249 jobs to the Midlands.

Company officials immediately halted plans to equip and staff the one million-square-foot building under construction at I-77 and 12th Street near Cayce.

“As a result of today’s unfortunate House vote, we’ve canceled $52 million in procurement contracts and removed all South Carolina fulfillment center job postings from our (Web) site,” said Paul Misener, Amazon vice president for global public policy.

The decision came shortly after state representatives rejected the tax break 71-47.
“People who think this is a bluff don’t know Amazon,” Lexington County Councilman Bill Banning said. “Too many other states want them.”

The partly finished center probably will be completed and then “put into mothballs,” he said.
Most Midlands lawmakers supported the exemption, but opposition fanned by a coalition of small merchants, national retailers and Tea Party activists proved insurmountable, even as Misener came to lobby lawmakers Wednesday in a last-ditch bid to save the proposal.

Other measures proposing the tax break remain alive, but a loss that was unexpectedly lopsided makes it unlikely any will be considered.

“This is really devastating,” said House Majority Leader Kenny Bingham, R-Lexington. “Anything is possible, but this makes it pretty difficult to resurrect.”

The loss of Amazon will be a black eye for future efforts to lure major employers to the state, Amazon allies warn.

“It’s beyond a squandered opportunity,” Banning said. “It’s a disgrace. It’s likely no one will even look at coming here for 10 years.”

Read full article here.

Read more on the subject here.

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