Retailers Offer Advice to Obama on How to Lift Economy

The National Grocers Association and the National Retail Federation, in recent letters to President-elect Barack Obama, laid out their positions regarding the best way to achieve economic recovery. The NGA cautioned against too much regulation, and the NRF urged the implementation of series of national sales tax holidays as a way to kick-start consumer spending.

"An economic stimulus can best be accomplished in this unstable time by decreasing, not increasing, corporate tax rates, or the taxes on individuals that operate their businesses as subchapter S corporations or other pass through entities," wrote NGA president Tom Zaucha. "A comprehensive stimulus package should include among other items, extension of the current expensing and bonus accelerated depreciation. These tax incentives are used by retailers and wholesalers to invest in technology, energy-saving equipment, and trucks for their businesses in order to better serve consumers, their communities, create jobs, and grow the economy. In the long run, meaningful relief from the federal estate tax must provide family-owned businesses the incentive to pass the business on to the next generation, and not to have to recapitalize or sell the company in order to pay estate taxes."

Zaucha added, "Our economic wellbeing also depends on fair employer and employee relationships," warning that "overregulation" could disproportionately impact small grocers.

He encouraged Obama to be mindful of legislative issues that could have significant adverse effects on small businesses, among them mandates for paid sick leave, increased minimum wages, punitive civil penalties for employment law violations, and expansion employment discrimination laws.

The exec also counseled against exacerbating union and nonunion conflicts by considering the Employee Free Choice Act, which the NGA opposes as being too biased in favor of unions.

Zaucha further encouraged Obama to have the Department of Justice aggressively probe what he termed "the anticompetitive activities" of credit card companies and banks, and support legislation giving the Federal Reserve Board authority to regulate credit card interchange fees and rules.

Finally NGA urged the appointment of a chairman of the Federal Trade Commission and assistant attorney general for antitrust to enforce the law consistently and fairly.

The NRF letter, signed by chairman Myron E. "Mike" Ullman III (chairman and c.e.o., JCPenney Co.), first vice chairman Philip L. Francis (chairman and c.e.o., PetSmart, Inc.), second vice chairman Stephen I. Sadove (chairman and c.e.o., Saks, Inc.), and president and c.e.o. Tracy Mullin, advised quick passage of stimulus package legislation

"To be effective, any fiscal stimulus package must be enacted with great speed," the letter contended. "It must be substantial. And it must be sustained. To accomplish this, the plan must include a longer-term investment designed to produce sustained economic growth through job creation as well as short-term economic stimulus aimed at increasing consumer spending."

As for tax holidays, the letter writers noted their effectiveness. "Retailers' considerable experience with sales tax holidays has shown that they provide a substantial inducement for people to shop," they wrote. The organization proposed that tax holidays be held in March, July and October 2009, each lasting 10 days including two weekends.

Tax-free items would include all tangible goods subject to state sales tax, ranging from apparel and home furnishings to restaurant dining and automobiles but would exclude tobacco and alcohol.

By temporarily suspending the sales tax for those periods, NRF estimates that U.S. consumers could save almost $20 billion, or $175 for the average family.

An NRF survey conducted when a national sales tax holiday was under consideration in 2001 found that 82 percent of consumers were in favor of a tax holiday, 83 percent would take advantage by buying items, and 69 percent would make purchases they otherwise wouldn't have made.

NRF additionally called for infrastructure investment in roads, rails, ports, public schools, and renewable energy projects, which it wrote would both create jobs and repair systems that are critical to commerce.
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