Internet retail giant Amazon.com will begin collecting Tennessee sales tax this month, and area city leaders agree the move will help but won’t make a tremendous difference in their 2015 overall budgets.
In addition to Tennessee, Amazon sales tax collections will also be made in Indiana and Nevada.
Tennessee had previously avoided collecting Amazon sales tax, under a deal struck with former Gov. Phil Bredesen’s administration, but the online retailing giant’s competitors argued that arrangement wasn’t fair, Amazon later agreed to collect sales taxes beginning in 2014.
Amazon’s sales tax collections are estimated to generate about $17 million in recurring state revenue, and about $7 million in local revenue, according to the state legislature’s Fiscal Review Committee.
Winchester City Administrator Beth Rhoton said that when the $7 million is divided among hundreds of Tennessee municipalities, the amount her city will receive probably won’t be that significant.
“I don’t think it’s going to be that much, but every little bit helps,” she said.
Rhoton said Winchester gets back slightly more than $550,000 annually from the state of Tennessee in sales tax proceeds, and with the potential $7 million in new revenue divided among the state’s municipalities, what Winchester would receive would only be a small fraction of that.
She said if all online sales transactions involved collecting taxes on all of them, it would probably make a much bigger difference in what the city would receive.
“It’s fair that they should have to pay taxes,” she said, referring to online sales transactions.
Decherd City Administrator Mike Foster echoed Rhoton’s comments.
“If it generates more revenue for cities, that’s good,” he said. “Anytime there’s additional revenue, it can lead to an opportunity to increase services or lower taxes, and that’s always good.”
In addition to collecting sales taxes, Amazon agreed to build two distribution centers — one in Hamilton County and the other in Bradley, creating about 3,500 jobs.
In addition to employment, state finance officials said in an Associated Press story they hope the collection requirement will shore up state revenues that have been sluggish partly because of sales tax collections that have fallen short of projections the past few months.