Retailers’ Group: $3 Billion At Stake in Online Sales Tax Issue

A brick-and-mortar retailers’ group has warned that the state could lose out on $3 billion in revenue and more than 10,000 jobs over the next five years if online retailers continue not to collect sales taxes.

The projections are in an study commissioned by the Alliance for Main Street Fairness, a national organization made up of retailers ranging from small businesses to Wal-Mart.

“From the Alliance point of view, this really tells us the Amazon deal is a bad deal for Tennessee. It’s going to cost us more jobs than it’s going to gain,” said Mike Cohen, the organization spokesman, said during a press conference at Cumberland Transit bike shop in Nashville.

The Alliance opposes a deal the Bredesen administration struck with online retailer Amazon.com, which promised to build distribution centers in Hamilton and Bradley counties under an agreement the company would not have to collect sales taxes.

Gov. Bill Haslam has said the state should honor the deal, but that he wants Amazon to collect sales taxes on its transactions in Tennessee in the future, and his administration is currently negotiating with Amazon to find a long-term solution. As of last week, Haslam said he had nothing new to report.

The Legislature is generally split about what the state should do. Sen. Jim Kyle, the top ranking Senate Democrat, is too.

“It will take the local business community to drive that Amazon issue,” Kyle said during a stop outside the University of Memphis during the Democratic Jobs Tour Monday. “There are two sides to it. One is keeping your word and the other is, doing what’s the right thing to do. The unfortunate thing here is when you’re keeping your word, you’re not doing the right thing.”

The Alliance’s study leaned heavily on a report out of the University of Tennessee, which found the state would miss out on collecting as much as $456.1 million in local and state sales taxes next year on online purchases. Taxpayers last year paid more than $8 billion in state and local sales taxes, according to documents from the Department of Revenue.

Younger Associates, which performed the analysis for the Alliance, asserts there is a direct relationship between state and local government spending and the number of jobs supported. If retailers like Amazon.com are not forced to collect sales taxes, about 6,900 jobs would be lost next year, leading to a loss in wages and decreases in consumer spending to purchase other taxed items such as gas, cars, alcohol, tobacco and amusement.

The study says that would translate to additional lost sales tax collections — in total, $480.7 million in 2012, followed by a loss of $3.02 billion in taxes and 10,567 jobs in five years.

  • Slim Shavings

    I think we should tax people for everything. Even there should be a daily tax on being alive. Hilarious how we look back a the Serfs of medieval days and feel sorry for them. Yet when you study you find out that at the max ,they were only taxed a total of 20%. Not us. we should work year around for the Govt. After all they know everything. Just look around you. Republican or Democrat intensely smart and capable. besides limo’s are expensive

  • Pingback: September 20 TN News Digest | Tennessee Report

  • http://www.catheycommunications.com Robert Cathey

    Whomever is running public relations for Amazon is doing third-rate work. If they have a good contra argument to the logic that they — like every other retailer — should collect state sales taxes, then they need to publicize it.

    Simply saying, “You promised” is weak beyond weak.

  • Amy Liorate

    I’m with Slim Shavings, the real Slim Shavings/ all the other tax slaves are just imitating.

    Though it is the nicer option to have a sales tax over an income tax. That way you have some choice in the matter instead of the state just reaching in and grabbing a share of your paycheck before you get a chance to even cash it. You can donate to charity without losing 5% before hand. You might use some of your money traveling to other places or save up for a house without having 5% yanked away before you could use it.

  • Pingback: Kisber Doesn’t Recall if Amazon Deal was in Writing | Tennessee Report

  • Pingback: Uncertainty in Washington Discourages Hiring in TN: Hagerty | Tennessee Report

  • Pingback: | Missouri News Horizon