TRENTON – Assembly Democrats Albert Coutinho, Vincent Prieto, Troy Singleton and Lou Greenwald announced on Tuesday that they’ve introduced legislation to encourage internet retailer Amazon.com to locate two warehouses in New Jersey.
Under current state sales tax law, internet retailers are only required to collect sales tax if they have a physical presence in the state.
The Assembly Democrats’ bill (A-2608) allows an online retailer to temporarily suspend sales and use tax collection in exchange for capital investment and job creation. Some online retailers do not collect sales tax, but those qualifying under the bill would be required to compete under the same rules as existing New Jersey retailers once the exemption expires.
While Amazon.com is considering a move to New Jersey, the legislation would allow any online retailer to qualify. The bill would also update state law regarding sales tax collection by internet retailers that have affiliates located within the state.
“With job creation a top priority, we’re certainly interested in any plan that brings 1,500 sustainable and accessible jobs to New Jersey and protects taxpayers and retailers,” said Coutinho (D-Essex), the Assembly Commerce and Economic Development chairman. “We’ve been having productive discussions and developed this well-rounded legislation that benefits everyone. We need jobs, economic growth and a level playing field, and we get all three with this bill.”
“Assembly Democrats are committed to job creation, and we’re optimistic about this legislation that will welcome online retailers to New Jersey and provide reliable jobs while leveling the playing field with existing retailers,” said Prieto (D-Bergen/Hudson), the Assembly Budget chairman. “We look forward to a positive conclusion that leads to fair competition, job creation and economic development. This is a significant agreement that benefits our state.”
“This is about creating jobs for New Jerseyans and protecting New Jersey retailers both large and small by creating an equal footing with regards to sales tax collection,” said Singleton (D-Burlington). “We’re talking here about full-time jobs with benefits and a major construction project in which workers will earn livable wages. When all is said and done, we will have new jobs and online retailers will play by the same rules as everyone else. These are all positive developments.”
“My goal and the goal of legislative leadership has always been to find a way to balance the interests of the retail merchants and the Internet merchants in a way that will ensure equity and a level playing field going forward,” said Greenwald (D-Camden), the Assembly Majority Leader. “I believe this plan accomplishes that goal with the added benefit of 1,500 new jobs, economic growth and smart provisions that protect taxpayers. This bill is a great step forward for New Jersey’s economy.”
The bill grants a company such as Amazon an exemption from the requirement to collect the sales tax on its sales to New Jersey customers until Sept. 1 2013, so long as it makes the $65 million dollar capital investment in the state and creates 1,500 jobs with benefits for state residents.
Amazon, for instance, currently doesn’t have a physical presence in the state, and the state doesn’t gain any sales tax collection from Amazon. That will change once the exemption ends, and the company will be governed by the same rules as brick-and-mortar retailers.
The sponsors noted they’ve negotiated and have inserted several requirements designed to protect taxpayers and brick-and-mortar retailers into the bill. The measure:
- Amends the definition of “seller” to create a rebuttable presumption that a person is a seller required to collect sales tax on taxable sales in the state if another person conducts activities in this state that are associated with the ability to establish and maintain a sales market.
- Specifies that the 1,500 jobs must go to New Jersey residents;
- Includes a transportation accessibility requirement. If the online retailer locates within a quarter-mile radius of a public transportation facility, the bill would require them to establish a plan to encourage employees to use public transportation. If it locates farther from a public transportation facility, the bill would require it to work with NJ Transit and others to establish an alternative plan that would provide viable commuting options to employees who rely on public transportation.
- Requires that the facility’s construction contract contain an agreement to hire unionized workers.
- Requires that all workers employed in the construction of the facility be paid at least at the prevailing wage;
- Prohibits part-time jobs from being eligible to fulfill the bill’s job creation requirement of 1,500 jobs. Thus, the 1,500 jobs must be full-time with benefits;
- Requires a 5-year commitment, beginning when the exemption ends, by the online retailer to stay in New Jersey.
- Makes certain that the activities to be undertaken at the facilities would constitute a nexus for sales and use taxation once the exemption ends;
- Requires the payment of an amount equivalent to the uncollected sales tax during the exemption period should staffing levels fall below 1,500 jobs;
- Removes the sales tax collection exemption if the company applies for other state business incentive assistance during the period covered by the legislation.
The bill has been referred to the Assembly Budget Committee.
The New Jersey Retail Merchants Association wants to see all internet retailers collect the state sales tax, to level the playing field with traditional brick-and-mortar stores.