Online retail giant Amazon.com will invest $130 million in New Jersey, build two warehouses, and bring 1,500 full-time jobs to the state, Gov. Christie announced Wednesday.
In return, the Seattle-based Internet retailer will collect the state’s 7 percent sales tax from New Jersey residents who buy online starting in July 2013. Christie said at a news conference that the tax collection would bring an estimated $30 million to $40 million a year to the state.
The deal is contingent on Amazon receiving tax incentives to finance construction of the warehouses in cities that were not named.
Amazon has been negotiating to open the distribution centers, but wanted a two-year tax holiday.
Brick-and-mortar retailers objected, saying Amazon would have a competitive advantage. They went to Trenton in March and asked lawmakers to require out-of-state Internet retailers to collect sales tax, just as Main Street businesses do under the law.
"There has been no bigger issue facing retailers than sales tax fairness," said John Holub, president of the New Jersey Retail Merchants Association. "We need to now use this event to continue the momentum and pressure Washington to finally resolve this issue for all Internet retailers once and for all."
Currently, Amazon does not collect sales taxes from New Jersey customers, although residents are supposed to pay the tax when they file tax returns. They seldom do.
The 7 percent sales tax is often the difference between a customer buying locally and ordering the product online. Customers often regard physical stores as showrooms and later make tax-free purchases online.
It’s a national issue. Growth in Internet sales and perceived tax-free shopping has caused even major electronic chains such as Best Buy to struggle. Best Buy announced recently it would close 50 stores nationwide.
Borders Group Inc. went out of business as more Americans made purchases on the Internet.
Christie urged members of Congress to support federal legislation, sponsored by U.S. Sen. Lamar Alexander (R., Tenn.), that would allow states to require all Internet-based retailers to collect sales taxes.
"This has been a long time coming, and whether it comes from an agreement such as this, or legislation, doesn’t matter," said Assemblyman Albert Coutinho (D., Essex). "What matters is the job creation and economic growth" and "fairness for N.J. businesses that have been competing against Internet retailers on an uneven playing field."
Paul Misener, Amazon vice president of global public policy, stood with Christie and said that "today is a great first start for the state of New Jersey. We’re really happy" to allow New Jersey "to get all the revenue available to it."
He estimated that 80 percent of all sales tax owed to the state "can only be accomplished through federal legislation." Amazon has opposed attempts by states to require out-of-state sellers to collect sales taxes owed, without congressional authorization.