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S.C. Gov. Nikki Haley has publicly questioned a sales tax “safe harbor” incentive that Palmetto state officials reportedly promised internet retailer Amazon.com in an effort to land a new “fulfillment center” in Lexington County.

But that doesn’t mean she’ll block the deal from going through …

A 2005 bill passed by lawmakers created a “safe harbor” from sales tax collections for out-of-state distributors, but that law recently expired. State officials promised Amazon that the legislation would be resurrected this year, but so far that hasn’t happened.

Haley is under tremendous pressure to veto “safe harbor” legislation from her allies at the S.C. Policy Council, a “conservative” think tank that opposes taxpayer-funded incentives. Numerous S.C. businesses are also opposing the deal, saying that it hurts their ability to compete.

Still, Haley has told legislative leaders that she will not block the controversial “safe harbor” legislation if it reaches her desk.

While she has not promised to sign the tax breaks, sources close to S.C. Majority Leader Kenny Bingham tell FITS that Haley has promised lawmakers she will not veto them, either.

“She’s not going to endorse it or push it but she’s told us if it reaches her desk she will not veto it,” our source says.

South Carolina governors have three options when a piece of legislation reaches their desks – they can sign it, veto it or do nothing, in which case the bills becomes law without their signature.

It looks as though Haley is currently favoring this third option, although our source added that her lack of public support could cripple the legislation’s chances of reaching her desk.

FITS was the first major S.C. media outlet to report on this deal. We were also the first to report on subsequent problems with the legislation.

One of the last major economic development deals negotiated by former S.C. Commerce Secretary Joe Taylor, the Amazon facility would create as many as 1,300 jobs – but it won’t be built unless lawmakers agree to carve out this exemption for the company, which they have yet to do. In fact, no one has even stepped forward to sponsor the legislation at this point – which we’re told has company executives extremely nervous.

While Haley tries to play it coy, her administration is on the record in support of the deal. In fact, S.C. Department of Commerce officials spoke in favor of the “safe harbor” legislation on Thursday at a meeting of the S.C. Chamber of Commerce. However numerous business leaders noted that S.C. Commerce Secretary Bobby Hitt (who was scheduled to speak at the meeting) failed to show up.

The Chamber of Commerce – far from a business-friendly organization – voted to oppose the tax exemption.

The $100 million facility would be located at Lexington County’s new 400-acre industrial park – which was built three years ago but has yet to land a corporate recruit. Lexington officials have already approved a fee-in-lieu-of-tax (FILOT) agreement related to the project, but the value of this incentives package has not been disclosed.

On the same day that news of Haley’s position regarding Amazon began leaking out, Illinois Gov. Pat Quinn signed a so-called “Main Street Fairness” act that imposes a new set of taxes on internet retailers. Similar legislation has been passed in New York, North Carolina and Rhode Island.

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