Tuesday, December 07, 2010

IBO's Peddler IBS

We have commented previously on the Independent Budget Office's report on peddling, but reading the full document is a real eye opener: "There are a myriad of regulations for street vendors, including restrictions on the number of licenses for different types of vendors...With the different types of licenses also come different rules on where and when vendors can vend. These rules can change from one block to the next, making it difficult for the police, who have the primary enforcement role when vendors are on the streets, to know what applies and where. In Manhattan alone there are rules that restrict general merchandise vending on at least 160 blocks, with outright bans on some blocks and limits on hours or days vending is permitted on other blocks."

Quite confusing for the police who just might have more important crime fighting responsibilities than trying to figure out if a peddler is operating legally or not. But what's interesting in this is how derelict the city is in not only enforcing the rules, but also in collecting the fines that do get levied: "The extent of the rules for different streets and different types of vendors is in part a reflection of how controversial vending has been in the city for more than a century. Given this controversy, it is somewhat surprising that the two primary indicators of street vending enforcement—illegal peddling arrests and illegal peddling summonses—were dropped from the Mayor’s Management Report after 2007."

IBO doesn't speculate on why this is so, but their surprise is something that we don't share. The Bloombergistas have abdicated their authority controlling what gets placed on the city's sidewalks-even while spending millions alterating the city streets with impunity. Nowhere is this more evident than in the way the city allows scofflaws to get away with not paying their fines: "The largest source of revenue is from fines. In 2009, just over $9.0 million in fines were imposed on vendors, up from nearly $6.8million in 2008. But the actual amounts collected were significantly less. In 2008, vendors paid $479,325 on fines levied during that year. In the following year, they paid $419,852 on fines still outstanding from 2008 as well as fines newly imposed in 2009. In other words, out of $15.8 million in fines levied in 2008 and 2009, $14.9 million was uncollected through the end of fiscal year 2009."

Remarkable nonfeasance on the part of the mayor-and a clear indication that this administration doesn't give a whit about the legitimate taxpaying store owners who are forced to compete with those low overhead peddlers who quite often literally set up shop right in front of their stores: "One complaint often made about street peddlers is that they underpay—or do not pay—sales tax, giving them an unfair advantage over storefront retailers and cheating the city and state of tax revenue. IBO explored this assertion but was unable to find data that would verify or refute it."

And why is that so? Well, because there is no system in place to track the payments-or lack thereof: "A state law aimed at improving sales tax collection from street vendors went into effect in March 1995, but regulations to apply the rule were never implemented. The measure, based on a January 1993 report by the state tax department, Improving Sales Tax Compliance: Recommendations for a Compliance Improvement Program, was spurred by the finding that “itinerant vendors” often fail to comply with tax law."

However, since peddlers keep no records, no tracking system was ever implemented-although it was recommended that the peddler suppliers be subject to audit: "Because street vendors generally do not have a lot of paperwork documenting sales, it is hard to audit tax compliance. So the report suggests that the suppliers who provide food or merchandise for resale by street vendors be required to file reports with the tax department that can then be used to assess whether the vendors are likely making adequate sales tax payments. While state tax law authorizes the tax department to require filing of these reports, the regulations to put the law into practice remain unwritten."

The unwritten law here is that the vendors can get away with murder-because with no compliance system there is no compelling reason to, well, comply. When it comes to fruits and vegetable peddlers there is a double disgrace involved with this hands off system. In the first place, no one knows who the suppliers are, even though the Department of Health is required to keep track of them under the city's own regs. This means that we have no idea about the provenance of the produce being sold-and whether the sources are contaminated or not.

Supermarket produce is thoroughly investigated by NYS Ag and Markets, but the city simply has no idea where street veggies are coming from. Which also means that any tax consequences are rendered moot-and the city's food stores are left sucking wind!

In conclusion, the IBO report is a devastating critique of the failure of the Bloombergistas to control a chaotic vending environment-and the streets where the chaos is allowed to take place: "Despite the bevy of rules, regulations, and restrictions—and in some cases perhaps because of them—street vendors, community residents, and business owners all seem dissatisfied with the system. The complexity of the regulations spelling out where and when vendors can vend, and the paucity of licenses are just two of the factors that contribute to the dissatisfaction."

The need for a thorough over all is compelling: "The number of agencies involved in street vendor regulation contributes to the convoluted rules and enforcement. While there may always be some tension between the interests of vendors and the interests of community residents and businesspeople, the current system appears to provide little relief to any of them."

Which is precisely why the city council needs to conduct an intervention. With Dan Garodnick, the new chair of the City Council's Consumer Affairs Committee at the helm, we are finally sanguine that we will be seeing some positive action-something which store owners feel is long overdue.