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Originally published June 1, 2011 at 11:54 AM | Page modified June 1, 2011 at 12:22 PM

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S.C. legislators give final OK to Amazon sales-tax deal

South Carolina legislators gave final approval Wednesday to a deal bringing Amazon.com and its promise of 2,000 jobs to the state.

The Associated Press

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COLUMBIA, S.C. — South Carolina legislators gave final approval Wednesday to a deal bringing Amazon.com and its promise of 2,000 jobs to the state.

The House voted 90-14 to approve a compromise brokered last week in the Senate, sending the measure to Gov. Nikki Haley's desk.

"It's a great day for South Carolina and the unemployed people of the state," Sen. Jake Knotts, R-West Columbia, said after the vote. "We welcome Amazon!"

Haley opposes the measure but has repeatedly said she won't veto it. The Republican governor has called it bad policy that's unfair to retailers that collect the tax. If not signed or vetoed, the bill would become law after five days.

"Nothing has changed" about her position, Haley spokesman Rob Godfrey said after the vote. He had no comment on the bill's passage, saying Haley is focused instead on getting her priorities passed in the session's closing days.

The deal gives Amazon a five-year exemption from collecting sales taxes from South Carolina's online shoppers. In return, the online retailer must create the full-time jobs with health benefits and invest at least $125 million through the end of 2013.

The deal the House approved last month allowed Amazon to drop to 1,000 jobs between 2014 and 2016, when Amazon must begin collecting the tax. But the Senate increased that to 1,500 jobs.

Amazon's plans to open a million-square-foot facility in Lexington County are expected to create thousands of spinoff jobs, including in shipping at the nearby airport and United Parcel Service hub. Amazon's plans will net the state more than $231 million in its first year and $1.7 billion over 10 years. That includes $67 million in annual payroll for Amazon workers making an average salary of $33,370, according to last week's cost-benefit analysis by the Commerce Department.

Opponents included tea party activists, the state's small-business chamber, and national retail chains that backed an anti-Amazon advertising campaign. Like Haley, they argued the deal carves out an exemption that gives the Seattle-based company an unfair price advantage. Supporters argued the state loses nothing, since Amazon does not collect sales taxes now in South Carolina. If the deal were rejected, they argued, Amazon would still not collect the tax, while taking the jobs and investment elsewhere.

The U.S. Supreme Court has twice ruled that states can't require companies to collect the tax unless it has a physical presence in the state, such as a store. State law says shoppers are responsible for paying the state what they don't pay online, but few do.

Last week's late-night compromise in the Senate requires Amazon to include a clause in each purchase confirmation e-mail telling customers they could owe the sales tax to the state. The e-mail must include a link to the state Revenue Department. Amazon also must send customers, either by mail or e-mai l, a yearly tally of what they've spent, and specify they may owe the sales tax on their income tax returns.

But that information will not be sent to the revenue agency, causing Haley to call the notification to shoppers meaningless.

The vote ends months of uncertainty about a deal negotiated under former Gov. Mark Sanford, which advocated extending to Amazon the five-year sales-tax collection exemption that QVC received in 2006. As details on the exemption emerged, opposition mounted. Haley left the decision to legislators while opposing it at meetings across the state. After the House rejected the initial deal, which promised 1,249 jobs and a $90 million investment, Amazon announced it was abandoning its plans. Local legislators and elected officials launched their own public-relations campaign and Amazon upped its offer, leading the House to approve the enhanced package.

The group that led the opposition plans to advocate next year for so-called "e-fairness" legislation in South Carolina, as it has in other states. Because of its massive size, Amazon has become a focal point of the national e-commerce debate, but the online retailer contends it's an issue only Congress can resolve.

"We appreciate the efforts of the legislators that stood up for retailers and thank them for debating the merits of sales-tax exemption incentives," said Brian Flynn, spokesman for the state chapter of Alliance for Main Street Fairness, which is backed by Wal-Mart, Target and other big box retailers. "In the end, important questions were raised about the fairness of giving one company a government granted competitive advantage over existing retailers here in South Carolina."

Half a dozen states have passed laws requiring companies with affiliates, marketing contracts or warehouses in the state to collect sales tax, including North Carolina and Arkansas.

Texas legislators passed a similar measure last month. But Gov. Rick Perry vetoed it Monday. Amazon announced in February it was pulling out of Texas after that state's comptroller general billed the company for $269 million in uncollected sales taxes over four years plus interest and penalties.

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