TRENTON – The state and Amazon.com reached agreement today on a contentious issue: collection of sales tax by an out-of-state, internet-based retailer.
The administration said Amazon will begin collecting sales tax in July 2013, addressing what bricks-and-mortar retailers say is an unfair advantage that so-called e-retailers have over traditional businesses.
Amazon agreed to open two distribution centers in the state, a capital investment of $130 million that will create approximately 1,500 full-time jobs plus thousands of seasonal, temporary or construction jobs, according to Gov. Chris Christie and Amazon Vice President for Global Public Policy Paul Misener.
Christie estimated very roughly the agreement may net anywhere from $30 million to $40 million a year.
But this is a first step involving just one company. Misener estimated that his company accounts for less than 20 percent of the available uncollected sales tax revenue.
Christie, as well as Assemblyman Albert Coutinho, (D-29), Newark, who has worked on this issue for months, said a federal law is needed to resolve the problem.
The N.J. Retail Merchants Association – which has pressured the state on this issue for some time – cheered the news.
“It’s great news,’’ said association President John Holub. “There is no bigger issue facing retailers than sales tax fairness. Now we have a definitive date on which they must start collecting sales tax.’’
What Amazon needs now are sites in-state.
Christie and Misener said the company is at the beginning of the process of deciding where to locate facilities. And Coutinho said that tax incentives – such as the Urban Transit Hub Tax Credit – may play a role in the company’s decision. To qualify for that program, the facilities would have to be situated close to major transit stations in one of nine cities: East Orange, Hoboken, Trenton, Paterson, Camden, Jersey City, Elizabeth, Newark or New Brunswick.
Christie said he expects Amazon to apply to the state’s Economic Development Authority for tax incentive programs.
Coutinho said that this agreement would basically mean the legislation that had been working its way through the Legislature will be set aside.
“I’m hopeful others will follow Amazon’s lead,’’ he said.
And Christie urged Congress to pass a law. “It’s crucial for creating that level playing field,’’ he said.
Misener addressed one of the past complaints regarding their distribution centers, that working conditions were poor.
“We’ve taken it upon ourselves to invest over $50 million in new air conditioning so that won’t happen again,” he said. “Our safety record is impeccable.”