State Street

Ultimatum from Amazon causing stir in Trenton

Jessica Perry//February 27, 2012

State Street

Ultimatum from Amazon causing stir in Trenton

Jessica Perry//February 27, 2012

Amazon.com is showing signs of frustration with legislative negotiations over a state effort to have the online retailer collect sales taxes.

Amazon.com is showing signs of frustration with legislative negotiations over a state effort to have the online retailer collect sales taxes.

Assembly Democrats introduced a bill to give Amazon a reprieve from collecting the taxes until Sept. 1, 2013, in return for bringing 1,500 jobs and $65 million in investment to the state. Amazon apparently backed the measure, which seemed likely to receive Gov. Chris Christie’s signature, according to sources.

But a bill introduced by Sen. Raymond J. Lesniak (D-Union) takes a different tack, instead offering Amazon up to $30 million in tax credits to invest in the state. That’s left Amazon considering a strong-arm approach. Company representatives have told state officials the deal is off the table if the legislation they support is not sent to the governor by March 15, according to a source.

“They gave me an ultimatum, and I said ultimatums don’t work very well in New Jersey,” Lesniak said, adding that there is always room for compromise. He said the deal offered in the Assembly bill would allow Amazon to continue to capture existing retailers’ market share, while his priority is to put the online seller on equal footing with other retailers.

Assemblyman Albert Coutinho (D-Newark) has said the Assembly bill is a necessary step to put Amazon on a path toward collecting taxes in lieu of action by Congress.

The sales-tax proposal continues to be met with skepticism by brick-and-mortar retailers, as well as by Amazon affiliates who are concerned about the impact they would face.

John Holub, president of the New Jersey Retail Merchants Association, said he appreciates efforts by bill sponsors to address retailers’ concerns, but the deal remains problematic.

“Our belief is that Internet-only retailers should start collecting sales taxes today,” Holub said.

Matthew Cheng, president of West New York-based online coupon site eCoupons.com, said his business would have to relocate from the state under the current legislation, since online retailers generally cut off affiliates that are based in states that force online retailers to collect sales taxes.

Similar legislation “has not resulted in sales tax collection in any state, and has only caused marketing and technology companies to lose money or be chased around the country,” he said in a statement.

Budget proves Christie is ‘a skillful horse trader’

Gov. Chris Christie fired the first volley in the annual budget season last week, and senior lobbyists in Trenton said the governor is well positioned for upcoming negotiations with Democrats.

Roger A. Bodman, senior partner of Public Strategies Impact, said Christie is making a strong argument that the state’s income taxes must be lowered to make it competitive with regional neighbors.

“There’s not a special interest here, it’s a statewide interest,” Bodman said of a 10 percent income tax cut. “I suspect the governor will win the argument on its merits.”

Bodman said the address positioned the state to promote job creation, both in tax policy and in education policy.

“I think our friends in the other party are going to have a hard time finding things to complain about,” Bodman, a Republican, said.

Clark W. Martin, president of MBI-GluckShaw, said the budget proposal is “almost a paradox” in that it increases spending while cutting taxes, due to its reliance on steep revenue increases. That puts Democrats in a bind, he said.

“Now that Democrats want to be contrary, they’ll want to decrease spending — and that’s not their nature,” Martin said, noting that it was Democrats in past years that relied on strong economic growth forecasts to make room for their budget priorities.

Martin added that while Democrats staunchly opposed Christie when it appeared that he may run for president, they again have room to reach compromise.
“He’s a skillful horse trader,” Martin said of the governor. “He definitely knows what he’s doing.”

William J. Pascrell III, of Princeton Public Affairs Group Inc., said there remains a large gap in emphasis between the tax plans of Christie and the Democrats. But Pascrell, a Democrat, was encouraged by several items in the budget, including Christie’s decision to include pension funding. He added that he hopes room can be found in the budget for film and digital media tax credits.

“I’m encouraged to see the governor is looking at increasing tax credits, which I’ve been a big proponent of,” he said.

Red Tape Review Committee to focus on contracting, BPU

Members of the Red Tape Review Commission said the group led by Lt. Gov. Kim Guadagno will soon be turning its attention to cutting the bureaucracy related to public bidding and contracting, as well as the Board of Public Utilities.

Sen. Steven V. Oroho (R-Sparta) said he was concerned with bidding and contracting, which he called “too burdensome” on businesses.

Oroho said the topic will be the focus of one of the commission’s public meetings.
“If I go across the river (in Pennsylvania), my bid package is this big,” Oroho said, holding his hands less than an inch apart. “In New Jersey, it’s this size,” spreading hands more than a half-foot apart.

Assemblyman John J. Burzichelli (D-West Deptford) said the commission will also be looking into the size of the BPU.

“Complicated issues become overly complicated by a bureaucracy that was established in a different time,” Burzichelli said of the agency, which he described as “bureaucratically heavy.”

Kean prepares new version of the school vouchers bill

Senate Minority Leader Thomas H. Kean Jr. (R-Westfield) plans to introduce a new version of the bill allowing for vouchers, or opportunity scholarships, on Feb. 27.
“I’m hopeful about the Opportunity Scholarship Act,” he said shortly after Gov. Chris Christie’s Feb. 21 budget address.

Christie spoke enthusiastically about the program, which would provide scholarships or vouchers to students to attend private schools.

“We need to give choice and hope to those students and parents now trapped in failing school districts” by passing the bill, Christie said in his budget address.
The governor included an increase in school choice aid in his budget proposal, increasing the amount from $22.3 million this year to $36.5 million in the budget starting July 1.

Sen. Raymond J. Lesniak (D-Union) sponsored an earlier version of the bill, and said he would be reviewing Kean’s proposal to see if he would sign on again this year.
“First and foremost, the city of Elizabeth has to be in it,” Lesniak said of the criteria for establishing which cities would qualify for the program.