Indiana makes a deal with Amazon on sales taxes

The online retail company has been in dispute with a few states over collecting sales taxes.

Jeremy Hobson: This week, Indiana became the latest state to make a deal with the online retailer Amazon involving the collection of sales tax. Online shopping is largely exempt from sales taxes, and cash-strapped states are trying to change that. So what did Indiana do?

Well, let's bring in Indiana Governor Mitch Daniels, who's with us from Indianapolis. Good morning, Governor.

Mitch Daniels: Good morning, Jeremy.

Hobson: How difficult was it for you to reach this deal with Amazon?

Daniels: I would say it was that difficult. It took a while to work out, but they were very cooperative. Deals aren't that hard when both parties start from the same premise and we do -- namely that the sales taxes that they impose ought to be paid, and paid by everybody equally and collected by everybody in the retail business.

Hobson: Amazon was on the same page as you? They think that these sales taxes should be collected?

Daniels: They do, by everyone. You know, Amazon, being so successful and visible, has gotten a whole lot of the attention here. But for instance, in Indiana's case, they represent at most maybe 20 percent of the uncollected -- I usually say, innocently evaded -- sales taxes that are owed. We're not talking about an additional or new tax here -- we're talking about the collection of a tax that's existed a long time.

Hobson: Well what was it that you did here? Because state after state across the country has been dealing with Amazon and trying to figure out what to do to make this work. What was it that you did that other states can do to make a deal?

Daniels: I'm not privy to conversations with other states, but maybe it's just that we did try to work constructively with them. Amazon has found Indiana four times now a good place to invest -- we are routinely now found to be one of the best business environments in the country -- and so they've become familiar with our state, they employ several thousand Hoosiers, and maybe that set the stage for this unusually cooperative agreement.

Hobson: Gov. Mitch Daniels, Republican of Indiana. Thanks so much for talking with us.

Daniels: OK Jeremy, take care.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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