Amazon.com Inc., the world's biggest online retailer, has agreed to collect 7 percent sales tax on purchases made in New Jersey starting next summer, the same time it plans to begin building two new distribution warehouses in the state.
The agreement, announced jointly by Gov. Chris Christie and Amazon executive Paul Meisner at the Statehouse on Wednesday, could bring thousands of construction jobs and 1,500 permanent positions at the warehouses. The collection of sales taxes, which online retailers like Amazon are not required to do now, will bring the state an estimated $30 million to $40 million a year in new revenue.
Amazon has not picked the locations for the warehouses. The retailer will be eligible for state economic assistance grants totaling millions on its investment of $130 million to build the warehouses.
"We're going to keep working and partnering with companies like Amazon to secure continued growth for our state and our families," Christie said in announcing the deal. "Each of (other companies') decisions to locate, stay or expand in New Jersey recognizes the concrete steps we've taken to improve our business climate, to create jobs and deliver tax relief and deliver new job opportunities to families in our state."
Amazon collects no sales taxes from New Jersey customers now, but would have been required to do so once the warehouses open. New Jersey residents who buy from Amazon are supposed to pay the sales tax themselves when they file their state income taxes, though few do.
The retailer has agreed to build job-creating distribution centers in Indiana, California, Tennessee and South Carolina in exchange for sales tax exemptions. It had requested a 22-month sales tax exemption in New Jersey.
Assembly Majority Leader Lou Greenwald of Voorhees introduced legislation in February aimed at enticing Amazon to locate in the state by granting it limited-time sales tax immunity. Though the bill was designed in the long-term to eliminate the disparity between online retailers and those operating out of traditional storefronts, brick-and-mortar retailers opposed the bill.
But they applauded the deal.
"There has been no bigger issue facing retailers than sales tax fairness, and we need to now use this event to continue the momentum and pressure Washington to finally resolve this issue for all Internet retailers once and for all," said John Holub, president of the NJ Retail Merchants Association. "We applaud the bipartisan efforts in Trenton to deliver a level playing field for retail businesses large and small."
Assemblyman Al Coutinho, a Newark Democrat who stood with the governor to announce the deal, said the agreement accomplishes everything the legislation would have done.
"What matters is the job creation and economic growth that will come with this enterprise," said Coutinho. "We need jobs, economic growth and a level playing field, and we get all three with this agreement."