South Carolina says Good-bye to Amazon but Hello to even more Wal-Mart stores

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(A follow-up to a story on sales tax exemption for Amazon in South Carolina from May 3, 2011, You can find everything on Amazon, except sales tax)

Small retailers in South Carolina must be asking themselves: if the enemy of my enemy is my friend, and then we win, and then my “friend” resumes life as another huge enemy, should taxpayers subsidize our demise?

In an announcement that some called a political “payoff,” Wal-Mart and South Carolina Gov. Nikki Haley announced this week that the company will open dozens of new stores employing as many as 4,000 people in South Carolina over the next five years (of course, research suggests that Wal-Mart destroys 3 retail jobs for every 2 it “creates). It already has significant presence in the state with 74 stores, two distribution centers, and nine Sam’s Clubs.

The announcement came just a week after the South Carolina House rejected a bill that would give the online retailer Amazon an exemption from collecting sales tax on the state’s residents (as part of a larger subsidy package). One of the active opponents to the Amazon deal was Wal-Mart.

During the Amazon sales tax exemption debate, Wal-Mart, along with other big-box retailers, joined organizations representing small businesses in South Carolina to actively lobby against the deal. Besides its seven lobbyists  pressing the House, Wal-Mart encouraged its South Carolina employees to communicate their opposition to state representatives.   The retailer argued the Amazon exemption would be harmful and unfair to bricks-and-mortar stores. After the House rejected the deal, Amazon cancelled plans to open a distribution center in the state.

Reacting to this week’s Wal-Mart announcement, supporters of the Amazon deal said that Wal-Mart wanted to reward the Governor for her hands-off approach and the House for opposing the Amazon deal, calling the announcement “suspect,” a “shell game,” and “a payoff.”

Over the years, critics of Wal-Mart have pointed to the retailer’s low-wages, unaffordable benefits, lack of career paths for the majority of workers, contribution to sprawl,  and anti-unionism. Some in South Carolina point out now that the same small retailers that Wal-Mart “partnered” with against Amazon will likely become Wal-Mart’s victims as it gains market share by opening more supercenters. 

Wal-Mart’s rhetoric on the Amazon deal was quite ironic. It  argued that Amazon should not be granted sales tax exemption because it would give Amazon unfair advantage over other retailers. But Wal-Mart and developers who build for it are not shy about asking public officials for economic development subsidies that small retailers often consider an unfair advantage. In  Shopping for Subsides: How Wal-Mart Uses Taxpayers Money to Finance Its Never-Ending Growth, Good Jobs First documented that the retailer benefitted from $1 billion in such subsidies (later updated to $1.2 billion) from state and local governments. In South Carolina, for example, Wal-Mart enjoyed a $10 million deal from the City of North Charleston for infrastructure improvements at its supercenter, and a distribution center in Pageland got a deal worth of $28.2 million in various subsides.  (For a national compilation of such deals, see Good Jobs First’s Wal-Mart Subsidy Watch webpage).

Will locally owned retailers now remind Wal-Mart and elected officials about unfair advantage, whether it applies to Amazon or Wal-Mart? Or will the enemy of their enemy cash in as South Carolina subsidizes Wal-Mart’s new facilities?

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