The state and Hillsborough County are poised to reward an out-of-state corporate giant that has avoided collecting Florida sales tax for more than a decade by offering it millions in tax incentives to finally hire Floridians and contribute to the state's economy. Gov. Rick Scott tried to sell his tentative agreement with Amazon on Thursday as another sign that he is improving Florida's economy. Don't be fooled. Amazon is once again getting just what it wants — access to the Florida market at less cost than competitors who have been here for decades.
Under the deal outlined by Scott, Amazon would spend about $300 million building one or more distribution centers in the state and employing 3,000 Floridians. One potential site would include 1,000 jobs at a warehouse in Ruskin in Hillsborough County. And the company could no longer benefit from a federal loophole to justify failing to collect sales taxes from Florida customers. It would have to collect sales taxes in Florida once it opened its first warehouse here, no later than 2016.
If the negotiations had stopped there, it would have meant the state had finally leveled the playing field for the state's traditional merchants against at least one major Internet competitor. Growing e-commerce sales have cost the state an estimated $450 million annually in lost revenue, shifting the cost of state and local government disproportionately onto customers who support Florida retailers.
But the state's deal with Amazon doesn't stop there. Hillsborough County commissioners are expected to consider next week whether to grant Amazon $6.6 million in taxpayer incentives to locate there. And Enterprise Florida, the state's economic development agency, is working with other communities to further sweeten the pot.
Such a traditional pay-them-to-come mentality sells Florida's negotiation position short and is just further evidence how Republican leaders' antitax posture has undercut the state's leverage and made taxes less fair. Just last month, Scott said he had walked away from talks with Amazon and claimed that taxing the online sale of a book to a Florida customer — just as it's taxed in a Florida bookstore — was somehow a tax increase.
Amazon needs facilities in the nation's fourth largest state as it moves to a business model focused on quicker delivery. Earlier this month, for example, Tampa Bay Times' Bob Trigaux wrote about how the online merchant was exploring grocery delivery. It can't do that in Florida without building facilities here, which would also require collecting sales tax.
Amazon has accepted that the political winds have shifted on taxing e-commerce. The company now collects sales tax in nine states — including California, New York and Texas — and will do so in the near future in several others, including Virginia and New Jersey. It is also supporting the Main Street Fairness Act. Approved by the U.S. Senate in May, it would require all online merchants with $1 million or more in annual revenue to collect sales taxes.
Yet in Florida, shortsighted Republican leaders have failed to consider how to modernize a tax system so heavily dependent on sales tax revenue. Scott may have struck a deal that could bring 3,000 jobs, but he did it on the backs of taxpayers. Amazon, once again, is the big winner.