New Jersey, Amazon reach sales tax deal, but retailers still sold short.

New Jersey has reached an agreement with Amazon.com requiring the Internet-only retailer to begin collecting state sales tax on purchases made in New Jersey by July 1, 2013. However, the deal gives away a lot more than the state will get, according to state retailers and economic researchers.

In several states, politicians are bowing to Amazon.com extortion to trade jobs for distribution centers while waiving tax contributions to state tax coffers that local retailers must continue collecting and paying. Amazon.com has been using job-creating distribution centers in Indiana, California, Tennessee, and South Carolina as bargaining chips to avoid sales tax collection in special local deals with county and city governments.

New Jersey’s sales tax rate is more than 9%, which puts local retailers at that much of a price-point disadvantage without Amazon’s tendency toward predatory pricing.

According to Taxrates.com, Amazon.com is promising a $65 million investment to build two 1.2 million-square-foot warehouses that would require up to 1,500 new jobs (paying an average of $40,000-50,000 per year with health benefits). However, the tax website points out that Amazon.com sales tax revenues could exceed $200 million annually.

John Holub, president of the New Jersey Retail Merchants Assoc., told Taxrate.com he can’t “overstate how adamantly he opposes the idea of lawmakers giving Amazon.com permission to continue unfairly competing with the state’s businesses,, which also provide jobs.”

The Web site also reports that the New Jersey Retail Merchants Assoc. and Rutgers University researchers project New Jersey would lose $317 million in revenue annually by 2015 if online retailers outside of New Jersey don’t collect and remit sales taxes.

The national Retail Industry Leaders Assoc. President Sandy Kennedy said the association applauds New Jersey Gov. Chris Christie’s effort to level the playing field for retailers in New Jersey.

“Today’s announcement ends the practice of giving out-of-state retailers like Amazon.com an unfair advantage over those retailers who are an integral part of communities across New Jersey,” she said.

Curtis Riskey, CBA executive director, said Main Street retail is the fabric of local communities. Most Christian stores are local businesses that suffer from this tax inequity.

CBA has been cooperating with the American Booksellers Assoc., RILA, and other associations to promote sales tax fairness.

Thirteen U.S. states have recently enacted action to close a loophole from the 1990s that hurts Main Street retailers by not requiring Internet-only retailers without a physical state facility to collect sales tax.

Bipartisan legislation is pending in the U.S. Senate and House of Representatives that would provide states with tools to equally and easily apply sales-tax collection on Internet-only or remote sellers. The legislation streamlines administrative processes for remote sellers to collect and remit sales and use taxes.

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