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Costco Holds Off on New Montana Stores

KALISPELL, Mont.--Costco has decided to delay plans to build new units in the state of Montana because of a proposed tax on big-box stores under consideration by the state legislature, according to published reports.

"We feel this proposal is punitive against Costco and we are going to hold off on any additional investment in Montana until this is resolved," Doug Schutt, c.o.o. for Costco's Northern Division, told the Associated Press.

The retailer has not yet broken ground on its new store at the Spring Prairie Center on U.S. 93 north of Kalispell. Although construction would most likely not begin until spring, Shutt has said that if the bill becomes law, Costco will probably abandon the Kalispell location, which, at 136,000 square feet, would be about twice as large as the Costco store now open nearby.

The bill, sponsored by Sen. Ken Toole, D-Helena, would levy a 1 percent tax on gross retail receipts between $10 million and $20 million, a 1.5 percent tax on receipts between $20 million and $30 million, and a 2 percent tax on receipts above $30 million. According to the Montana Retail Association, the bill would also hurt Wal-Mart and Kmart, as well as many grocery stores. A similar bill, which was narrowly defeated in the Senate in 2003, was projected to raise about $60 million yearly for Montana. Because of the Senate's current complement of 27 Democrats to 23 Republicans, Montana Retail Association lobbyist Brad Griffin said the bill could clear the Senate this legislative session, which is currently under way.

Sen. Toole has said that Costco, which has a relatively high pay scale, could be exempt from the tax because of a special provision that applies to stores offering entry-level employees a compensation package of at least $22,000 annually and have no more than 25 percent of their employees working part-time. Schutt has responded that over 25 percent of Costco's workers are part-time, making it eligible to be taxed under the bill.

Toole says the bill is designed to modify Montana's tax code to accommodate the state's shifting economy and provide some form of property tax relief for residents.
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