Small Retailers Concerned About Border Tax; Energy Policy Event This Thursday

July 17, 2017

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Minnesota retailers headed to Washington, D.C. this morning for the National Retail Federation's Retail Advocates Summit. Pictured with MnRA members: Congressman Erik Paulsen (center).

Upcoming...

Solar On The Retail Rooftop & Minnesota's Energy Policy

For many retailers, the major cost of doing business--other than labor, rent and inventory--is energy.

The vast majority of energy policy is done at the state level, and most states have a highly regulated industry, with Minnesota being one of the most regulated states in the nation.

Join MnRA July 20 for a discussion facilitated by representatives of the Minnesota Conservative Energy Forum (www.mncef.com).

This event is open to members and invited non-members.

Thursday, July 20
9:30 - 10:45 a.m.
MnRA Offices - St. Paul

Dial-in option available. Indicate dial-in preference when registering.

Border Adjustment Tax

Small Retailers Say Border Tax Proposal Would Cost Jobs

From Furniture Today, July 13, 2017

"The National Retail Federation today urged the House tax-writing committee to consider small retailers and their employees when reforming the nation's tax code.

"Small retailers are probably the business group that is hardest hit by the potential impact of the BAT," NRF Senior Vice President for Government Relations David French said. "They do not have the economies of scale to be able to reduce the higher costs of their merchandise with the BAT imposed and are most likely to lose sales to lower-priced competition."

French's comments came in a letter to the House and Ways and Means Committee, which is holding a hearing today on how tax reform would benefit small businesses, grow the economy and create jobs. NRF has been advocating for comprehensive tax reform that would broaden the tax base and lower the rate.

French said the 20% BAT that would be created under the "Better Way" tax reform plan proposed by House Speaker Paul Ryan, R-Wis., and Ways and Means Committee Chairman Kevin Brady, R-Texas, would effectively move the U.S. toward a consumption tax structure rather than the current income tax structure.

"Our small retail members are very concerned about tax reform efforts that might shift the burden of taxation to consumption," he said. "Increased costs to the consumer will cause sales to decline and result in a contraction in their businesses."

Instead, he said, Congress should reject the BAT proposal and focus on reform of the existing income tax system."

Sales Report

Retail Sales See Second Straight Monthly Slide

From the Retail Dive, Daphne Howland, July 14, 2017

"Despite healthy measures of consumer confidence in June, shoppers are keeping their money in their pockets. "Consumers still seem tentative," Dan North, chief economist at trade insurance company Euler Hermes North America said in a note emailed to Retail Dive. North added that weak wage growth of 2.5% is tempering consumption and that despite a 0.5% rise in disposable income in May, consumption rose just 0.1%.

Still, the subdued results include signs of expansion that bode well for retail, according to GlobalData Retail Managing Director Neil Saunders. Lower fuel prices, for example, are factored into the retail sales dip, but they help struggling households spend more money elsewhere, Saunders said in a note emailed to Retail Dive.

Apparel sales remain tepid, and that's unlikely to change as the year progress, he said, adding to department store woes. "[D]epartment stores were the main loser this month. Among this group, sales were down by 4.2%, and our data suggest that this is mostly the result of a combination of lower traffic and continued heavy discounting. In our view, the spiral of decline at department stores looks set to continue," he said.

The bad news for retailers is that prices will continue to be under pressure, according to Saunders. "[I]t is clear that retailers are working hard to attract shoppers with many resorting to discounting to stimulate buying," he said. "While this is good news for consumers, it is bad news for margins and will dampen growth levels. Such a dynamic may be exacerbated by further bankruptcies in the sector and the consequent stock liquidations that follow."