March 20, 2012 / 4:37 PM / 6 years ago

TEXT-Fitch: Amazon is gold for some

March 20 - Fitch believes the benefit of a state's agreement with on-line
retailers like Amazon depends on more than new jobs and sales tax
revenue but also hinges on infrastructure and other local issues.	
	
New Jersey's state legislature is currently considering whether to change state
tax law to make a deal with Amazon. New Jersey may decide to make residents of
the state exempt from sales taxes on Amazon purchases for two years. If that
happens, Amazon has pledged to build two facilities that are projected to employ
1,600 people in Mercer or Middlesex County. Both counties have significant
existing infrastructure and are close to Newark Liberty International Airport,
one of the largest in the country. But both counties have large populations for
which 1,600 new jobs would have a limited impact.	
	
South Carolina made a similar agreement with Amazon in June 2011. The state
waived the sales tax for state residents who buy from Amazon for 4.5 years.
Amazon plans to build a $125 million facility in Lexington County that will
provide a projected 2,000 jobs. In a county with just 262,391 residents (as of
the last U.S. Census), this could have a positive impact on the area's 7%
unemployment rate. However, the location that Amazon chooses may require some
infrastructure development in the form of roads and could require some changes
at the local airport. How much those costs amount to and how they are shared
among the local and state governments remain to be seen.	
	
Amazon is actively negotiating with other states. The Florida Legislature is
currently considering an offer like the one in New Jersey. Florida's
infrastructure is significantly developed in some regions but barely in others.
The location of those proposed distribution centers will be important.	
	
	
Additional information is available on www.fitchratings.com	
	
The above article originally appeared as a post on the Fitch Wire credit market
commentary page. The original article, which may include hyperlinks to companies
and current ratings, can be accessed at www.fitchratings.com. All opinions
expressed are those of Fitch Ratings.

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