By a 71-47 vote, the South Carolina House rejected legislation that would have given online retailer Amazon the tax breaks it wanted for a new distribution center in Lexington County. The language was tacked on to an existing bill that offered tax exemptions for durable medical equipment.
As part of an agreement it signed with the administration of former Gov. Mark Sanford late last year, Amazon sought an exemption from collecting a sales tax on goods it sells in South Carolina. However, a strong outcry resulted after other businesses complained those breaks would give Amazon an unfair advantage.
Amazon is threatening to stop construction on its site if it does not get the breaks.
Rep. Thad Viers (R-Myrtle Beach) said South Carolina would be giving up too much by passing the legislation.
I believe that, if we go down this road today, every time a company comes through South Carolina or wants to stay in our state, they’re going to throw this in our face. We’re going to be held hostage. I mean, a thousand jobs… what are we talking about here, really? Three or four Wal-Marts?
However, many in the House leadership worried about Amazon’s threat to leave. Rep. Dan Cooper (R-Anderson) said South Carolina had nothing to gain if the online retailer opened its distribution center in another state.
They currently don’t collect sales tax from South Carolina residents because they don’t have any brick-and-mortar facilities in this state. They can decide not to move to Lexington County and they still won’t collect that sales tax from South Carolina residents because it’s online.
Party lines were not an issue in the vote. 47 Republicans opposed the amendment, while 26 supported it. A slim majority of Democrats also opposed the exemption, 24-21. 18 of the 20 legislators who represent either Lexington or Richland Counties voted in its favor.
Rep. Kenny Bingham (R-Lexington), whose district borders the Amazon site, said the state needed to keep the promise it made to Amazon. He said the benefits of bringing in the retailer outweighed the lost revenue.
One option is: we do not pass this amendment… In that case, we’re not going to collect the sales tax revenues. Amazon will not be in the state of South Carolina. Currently, they are not collecting and remitting sales tax. And they will not collect and remit sales tax whenever they’re not here.
Opponents questioned if Amazon would still back out without the exemptions. Rep. Kris Crawford (R-Florence) pointed out the company has distribution centers in Kansas, Kentucky, and other states that require them to collect the tax. But, others weren’t so sure, pointing out that Texas and Indiana are facing similar battles with the retailer.
The amendment itself was based on a similar deal with multimedia distributor QVC a few years ago. The company built a facility in Florence that opened in 2007 and was granted a similar exemption at the time. It has since expired.
Rep. Todd Rutherford (D-Richland) said Amazon presented an even better opportunity.
I challenge any one of you to… tell me, if I live in Columbia, how many places I can go right now that are hiring at $15 an hour. I challenge any one of you to tell me more than three places.
The legislation would have only granted the exemption if Amazon hired at least 1,200 employees, provided health benefits, and kept at least 1,000 workers at the facility through 2016. It did not specify how much those employees had to be paid, leading several opponents to question if Amazon would hire at minimum wage.