Limited tax break for Amazon proposed

Lexington County legislators are exploring a deal that would give Amazon a sales tax exemption the online retailer wants for its new distribution center near Cayce, but only for a limited period.

That approach is taking shape after some lawmakers warned Wednesday that the company may have to settle for less than it wants from the General Assembly.

“We’ve asked them if there’s some other direction we can take,” House Majority Leader Kenny Bingham, R-Lexington, said of Amazon’s push for an incentive that would exempt it from collecting sales taxes on merchandise it sells inside South Carolina.

Company officials, at least in public, do not seem ready to accept less.

“Amazon hopes that South Carolina remains committed to extending protections of the job creation act so that we are able to bring jobs and investment to the state,” Paul Misener, company vice president for public policy, said in a statement released to The State newspaper late Wednesday.

It’s uncertain if a plan to provide a tax break for a few years would be sufficient for the company or enough to mollify opponents, some lawmakers said.

“There’s light at end of the tunnel, but it very easily could collapse,” said Rep. Nathan Ballentine, R-Richland.

Amazon’s proposal is opposed by other retailers as an unfair advantage for a competitor. But business leaders warn that telling Amazon ‘no’ will damage efforts to attract other major employers.

The conflict is over an incentive for a project that would generate 1,249 full-time jobs by 2013, with supporters saying hundreds more could follow.

“It’s a lose-lose situation,” Rep. Kit Spires, R-Lexington, said of the dispute.

The search for compromise comes as Gov. Nikki Haley again said it’s an incentive she doesn’t like but won’t block if it’s approved by the Legislature.

“I will sit and wait at my desk and, if it comes, we certainly will let it go,” she said at a quickly organized noontime new conference. “This is not about Amazon. We want companies in our state. What we don’t want is to change tax policy to get them here.”

But Haley is taking a hands-off role in trying to settle the conflict.

“There is no more bigger priority I have than jobs, but I will not do it on the backs of businesses we already have,” she said.

Haley’s lack of enthusiasm, some lawmakers say, has kept anyone from even introducing a bill giving Amazon the exemption, let alone fighting for its passage.

The tax break agreement was reached by her predecessor, Mark Sanford, without consulting key lawmakers shortly before he left office in January.

It has put Haley and lawmakers on a hot seat, anxious to bring in more jobs as unemployment persists at around 10 percent but worried about a backlash from Tea Party adherents and fiscal conservatives opposed to such favors.

“There is a deep divide on this,” Bingham said. “This is one of the toughest nuts I’ve had to try to crack.”

Some lawmakers are encouraging Haley to intervene, saying her support is vital.

Rep. Mac Toole, R-Lexington, said only Haley has the clout “to work out something acceptable” to save a project that some Lexington County leaders fear could be lost.

Amazon officials make it clear that “some tax exemption is non-negotiable,” said Rep. Todd Atwater, R-Lexington.

Meanwhile, Lexington County business leaders are stepping up in favor of giving the incentive to Amazon.

Supporters on Thursday will promote it as an economic boon for the Midlands.

“Small business America” will benefit as Amazon employees shop and dine at stores and the company markets goods for local merchants, said Randy Halfacre, Lexington mayor and president of the Greater Lexington Chamber of Commerce.

Construction is under way on Amazon’s 1 million-square-foot distribution center at I-77 and 12th Street, with a goal of being in operation this fall.

Company officials have said state coffers would gain up to $2.6 million a year initially in extra payroll taxes, while county officials estimate it will generate another $1 million in property taxes that mostly go to local schools.

Missing out on those gains if Amazon walks away is “a lost opportunity,” Halfacre said.

Courtesy of The State