Bloomberg News

New Jersey Lawmakers Rush to Lure Amazon With Sales-Tax Holiday

March 09, 2012

New Jersey (STONJ1)’s Democratic-led Legislature is working to pass a $40 million sales-tax break by March 15 to entice Amazon.com Inc. (AMZN), the biggest online retailer, to build two distribution centers in the state.

Under a measure pending in Trenton, Amazon and other Internet retailers with buildings in the state wouldn’t have to collect sales taxes from New Jersey residents until July 2013 if they create at least 1,500 jobs and make an investment of $65 million or more. Under a U.S. Supreme Court ruling, Internet retailers are required to collect sales taxes in states where they have physical presence; Seattle-based Amazon has none in New Jersey now.

Assemblyman Albert Coutinho, a Democrat from Newark sponsoring the measure, said Amazon has expressed interest in New Jersey as well as neighboring Pennsylvania and Delaware as the site of new distribution centers. He said there’s a “sense of urgency” to ensure the company doesn’t choose another state. The measure will be debated March 12 in the Assembly appropriations panel.

“The state has a lot to lose here,” Coutinho, chairman of the Economic Growth Committee, said in an interview. “This is an opportunity to have a major online retailer establish two distribution centers here, create over 1,500 jobs and make a $100 million investment.”

Feuding Over Taxes

Assembly Majority Leader Louis Greenwald, a Democrat from Cherry Hill, said he’s spoken to Amazon officials and local lobbyists for the company about the sales-tax exemption. He said the company has expressed interest in opening two facilities and creating 1,500 jobs.

Scott Stanzel, a spokesman for Amazon, declined to comment on the pending New Jersey legislation or confirm that talks with the state have taken place.

Amazon has been feuding with state governments over sales taxes, saying that imposing them on its transactions threatens jobs and leads to little new tax revenue. California Governor Jerry Brown signed a bill in September giving the company a similar, one-year reprieve from collecting sales taxes in the state.

To contact the reporter on this story: Terrence Dopp in Trenton at tdopp@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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