The agreement will be presented to the General Assembly as legislation for consideration when members convene in January.
Currently, Tennessee law requires that consumers pay use tax to the Tennessee Department of Revenue when making an online purchase from any retailer that does not collect sales tax. After 2013, responsibility for collecting and remitting the Tennessee tax will shift to the company. In the event that the U.S. Congress acts before Jan. 1, 2014, all online retailers will collect sales tax at the time federal legislation is enacted.
A federal solution is not likely to happen in the near future, according to statements released from the offices of Sen. Bob Corker and U.S. Rep. Chuck Fleischmann.
A statement from Fleischmann press secretary Jordan Powell said federal legislation is most likely a few years down the road.
“Chuck applauds Gov. Haslam and other state and local leaders for working out a solution that works best for the state of Tennessee and Hamilton and Bradley counties,” he said. “Chuck is focused on making sure an environment for job creation exists, and the deal worked out on the state level allows for an additional 2,000 jobs that are much needed.”
Corker press secretary Chuck Harper issued a similar statement saying the senator commended the governor for reaching a good conclusion.
“In terms of a federal response to the issue of states collecting sales tax from online retailers, he knows it’s a problem that requires a thoughtful solution and has said he believes it will eventually be resolved at the federal level,” the press release stated.
The agreement with Amazon resulted in the company’s subsidiaries creating 3,500 full time Tennessee-based jobs with benefits, thousands of seasonal jobs, and $350 million in capital investment by maintaining the previously announced projects in Hamilton, Bradley, and Wilson counties and additional undisclosed projects in Tennessee.
The distribution center in Lebanon is roughly half the size of the 1 million-square-foot centers in Hamilton and Bradley counties are, and has recently announced plans for another facility in Lebanon, about 25 miles east of Nashville.
The Lebanon fulfillment center is slightly less than half the size of either of the two 1 million-square-foot fulfillment centers in Cleveland and Chattanooga.
Total investment in Bradley County has been estimated at about $63 million. The company projects more than 400 full-time employees and up to 1,200 temporary jobs in peak holiday seasons in Bradley County. Amazon’s commitment represents 2,000 more full-time jobs than were originally announced in Hamilton and Bradley counties. The location of other jobs has not been released.
Doug Berry, Cleveland/Bradley Chamber of Commerce vice president for economic development, said Thursday afternoon during a meeting of the Economic Development Council that the local fulfillment center opened Sept. 15.
He said the sales tax agreement spreads the tax base across the state rather than concentrating it in Southeast Tennessee.
“While we may have lost an opportunity locally with this statewide [and] national debate on sales tax, we are very happy with what we have,” he said.
Haslam said, “We are proud that this worldwide brand has chosen to make a significant investment in Tennessee and is committed to expanding its presence here. This agreement balances meeting the needs of the company and the needs of the state by providing certainty to Amazon and brick-and-mortar retailers in Tennessee regarding sales tax.”
Paul Misener, Amazon vice president for global public policy, said the company is grateful to Haslam and the legislative leadership for their commitment to Tennessee jobs and development, which will allow Amazon subsidiaries to create at least 3,500 full-time jobs and $350 million in investment in the state.
“We’re committed to working with Tennessee and Congress to pass federal legislation as soon as possible and, as analysts have noted, we’ll continue to offer customers the best prices, regardless of whether sales tax is charged.”
State Rep. Eric Watson said, “I am appreciative of the efforts of Gov. Haslam, our leadership team in the General Assembly, and Amazon officials for working together to do what is best for Tennessee. This is a significant investment in our area and shows Bradley County is at the forefront of job creation in Tennessee.”
State Rep. Kevin Brooks said, “This is a tremendous announcement not only for Bradley County, but for our state as a whole. Amazon is signaling a long-term partnership with Tennessee by making this jobs agreement. Having a Fortune 100 company like this in our backyard is a great asset for our community.”
“I am excited about the news of this agreement,” State Sen. Mike Bell said. “I appreciate the commitment that Amazon has made to Southeast Tennessee, and the work that Gov. Haslam has devoted to resolving this issue.”
Both city and county mayors greeted the news of the agreement with sighs of relief after the governor announced in August his office was negotiating with Amazon. Former Gov. Phil Bredesen’s administration made the deal to let Amazon not collect sales taxes on items sold through fulfillment centers in southeastern Tennessee. Until August, Haslam publicly supported the agreement.
But Haslam said in the August statement that lawmakers should not force Amazon to collect Tennessee sales taxes without a prior agreement and that his administration was negotiating with Amazon to expand its presence in the state and also collect sales taxes.
Bradley County Mayor D. Gary Davis said Thursday it was “great that the governor and the leadership in Nashville have worked out a compromise with Amazon.com. It’s very important as we look forward to a long-term partnership and [the] jobs it is bringing to the community.”
The Bredesen deal upset some brick-and-mortar retailers who said it gave Amazon an unfair advantage. Strong lobbying from Wal-Mart Inc., Home Depot and Lowe’s prompted some lawmakers to call for reversing the arrangement. Haslam said in August he did not want to renege on the existing agreement.
Cleveland Mayor Tom Rowland said then he agreed with the governor and as much as he wanted Amazon to collect sales tax, he did not want the state to renege on the original agreement, a move that might have resulted in the loss of jobs, property taxes and local sales tax collections from employee purchases.
He said Thursday he applauded Haslam and Amazon for their willingness to negotiate and cooperation to come to an agreement that was best for all concerned.
“Having an agreement is better than forcing the company to collect sales tax,” he said. “We appreciate the investment in our county and in Tennessee, the jobs provided by Amazon, the outlook for continued growth and even more jobs. From the city’s perspective, while we don’t get property tax from their location in Bradley County, we will be able to share the sales tax.”