The Senate Finance Committee voted Tuesday for a measure to grant Amazon.com an exemption from the collection of sales taxes on goods it sells in South Carolina. The issue now shifts to the Senate floor for what promises to be some heated debate.
The online retail giant threatened to scrap its plans to bill a distribution center near Cayce that would create 1,200 jobs. Competing retailers says such a break would give Amazon an unfair advantage over businesses that must, by law, collect the taxes. Otis Rawl, President and CEO of the South Carolina Chamber of Commerce agrees.
Rawl says U.S. Supreme Court rulings over the years indicate what Amazon wants may not follow the rule of law, since they are setting up shop in South Carolina. Rawl is referring to the Court’s rulings in the cases of Quill Corporation v. North Dakota in 1992 and National Bellas Hess v. the Illinois Department of Revenue in 1967.
South Carolina Small Business Chamber of Commerce President and CEO Frank Knapp says he is sure what Amazon is asking for is legal. He says other states have granted similar exemptions. Knapp says the issue is “should South Carolina be doing it?”
Knapp surmises the debate in the Senate on the exemption will begin next week. He says he is sure that members of the rank-and-file of his organization and small businesses around the state will be bending the ear of their respective senators voicing their objections to the bill.
Amazon said the South Carolina Department of Commerce promised them that they could get the exemption passed in the legislature. That deal was made during Governor Mark Sanford’s tenure. Rawl said he let it be known that he did not think that it was good tax policy.
Knapp says this is a unique situation. Sales tax manipulation is not one of the incentives the state of South Carolina typically offers to attract businesses, especially considering that Amazon is a retail business and not a manufacturer.