Friday, March 27, 2009

Feeble Support for Small Business

As the budget clock winds down, it appears as if the legislature is prepared to stab small retailers-from all over the state-in the back. As the Daily News reports: "Lawmakers did tentatively agree to accept a slew of tax hikes that Paterson had proposed, including one to dramatically increase the fees stores pay for the right to sell cigarettes." This is simply outrageous.

Bodegas in the city of New York have lost 60%! of their cigarette sales to the black market-where untaxed smokes from Indian sources are making a mockery of the law. According to reliable sources, as much as 55% of all cigarette sales in the state are derived from the Indians-and if the proposed fee hikes go into effect, that percentage will go even higher; robbing more tax dollars from the beleaguered state treasury.

So, with the expected successful defense of Mom and Pop liquor stores-ranking high up there in the public interest-the legislature apparently will place 13,000 bodegueros at risk; a policy of planned shrinkage that has distinctive racial and ethnic overtones. Our earlier post on this topic bears repeating:

Not Feesable
As if the soda tax isn't bad enough, the governor also wants to raise the tobacco registration fees for all retailers across the state-a hike that would hurt all of the city's bodegas and newsstands already reeling because of the economic downturn.

As this report indicates, " There are staggering tax and fee increases for New York convenience stores in Governor David Paterson's proposed 2009-2010 state budget released Monday, said James Calvin, president of the New York Association of Convenience Stores (NYACS). "In trying to balance the budget amidst multi billion-dollar deficits, the administration seeks to tax, re-tax and up-tax everything we sell, transforming our stores into nothing more than tax collection vehicles for the state," he said."What this means, is that the average bodega in New York Cit that grosses under one million dollars a year will see its license fee rise from $100 to $1,000-a 900% increase.

Keep in mind that tobacco sales at these outlets have plummeted because of the confiscatory taxes at all levels of government-with the losses at the local level at more than $250 million a year-a 60% drop in sales! And the city will also have a commensurate increase in its fee as well.

The New York Association of Convenience Stores (NYACS) has taken the lead on the counterattack, and in a brief for legislators points out the following:"Registration fees should reflect the State’s administrative costs, not business volume, and certainly not sales of products unrelated to the license. Such fees should not be designed to punish the licensee for selling a legal product in accordance with regulations governing such commerce. These obscene increases would come at a time when our cigarette sales have dropped 65% or more over the past eight years, mainly due to the epidemic of cigarette tax evasion sanctioned by the State of New York. Essentially, the administration wants to charge us 900% to 4,900% more for the privilege of selling one-third as many cigarettes as we would be selling if they were enforcing the Tax Law equitably."

At a time when the state and city have still failed to properly interdict the illegal black market sales-particularly from Indian retailers-it is unconscionable to punish the law abiders even further; as if these fees in an economic recession were ever justifiable. The reality is that the city's 13,000 bodegas are hurting badly-with many on the verge of bankruptcy. To propose such a fee hike now means that the governor is simply out of touch with the very same streets that he grew up in-and the retailers who insure that neighborhoods remain vibrant and stable.