Grocery Industry Joins Border Adjustment Tax Fight

More than 100 businesses and trade organizations, including several representing the grocery industry, have formed a coalition in opposition to the Border Adjustment Tax (BAT). The coalition, Americans for Affordable Products (AAP), will launch a national campaign to inform consumers and explain to legislators that the BAT, a component of the U.S. House Republican tax reform proposal that would exempt exports from being taxed while taxing imports, will lead to significantly higher-cost everyday items, including food, gas and clothing.

Among the grocery organizations and companies that have joined AAP are Food Marketing Institute (FMI), National Grocers Association (NGA), BJ’s Wholesale, Meijer, Target and Walmart, along with many state associations.

“NGA and its member companies are concerned that a proposal to create a Border Adjustment Tax (BAT) will ultimately increase the cost of food for consumers,” said the Arlington, Va.-based association, which represents the independent sector. “From fresh produce to ground coffee, independent supermarkets carry a wide variety of food items that simply are not grown in the United States and must be imported either year-round or seasonally. As much as 30 percent to 40 percent of fresh produce items sold in stores are imported into the United States at some point throughout the year. Instituting a ‘food tax’ on consumers for imported products is simply not a workable solution. Because of this, NGA has joined with other organizations to launch the ... coalition to help educate policy makers on the negative impacts a BAT will have on business and American consumers.”

Similar concerns exist among more broadly based retail groups as well.

“The retail industry pays among the highest effective tax rates of all industries,” Sandy Kennedy, president of Arlington-based Retail Industry Leaders Association (RILA). “We, therefore, enthusiastically support reforming the current tax code and welcome the fact that both the President and Congress do so as well. However, the Border Adjustment Tax is harmful, untested, and would put American retail jobs at risk and force consumers to pay as much as 20 percent more for family essentials. We are committed to working with Congress to ensure they understand the impact of this proposal, and to pursue tax reform that reduces rates and benefits American consumers.”

“Whether it’s the automobile you drive, the gasoline you use, the groceries you put on the table, or the shoes and the clothes you put on your feet and back, the prices of all of those things will get driven up by the Border Adjustment Tax,” said Matthew Shay, president and CEO of the Washington, D.C.-based National Retail Federation (NRF). “Consumers ultimately are the losers from any effort to tax imports, because the economy in the United States is driven by consumers. There are plenty of taxes already on hard-working Americans and the retailers that serve them, and higher prices just add to that burden. We support creating a less complicated, more straightforward and equitable tax code, and will work with both the Administration and Congress to achieve that goal, but the Border Adjustment Tax is not the answer. Some may consider this a better way forward, but it is definitely not the best way.”

According to the NRF, if enacted, the BAT will cost American families as much as $1,700.