April 28, 2017 by Jon Hurst

"Don’t tax you, don’t tax me, tax the fellow behind the tree;” so said former Louisiana Senator Russell B. Long when describing “tax reform.”  This is a pretty clear description of the political process behind tax debates at the state and federal levels.  And this message is worth keeping in mind as we face major tax changes and debates over the next year on Capitol Hill concerning the Border Adjustment Tax; and on Beacon Hill and the state ballot on the so-called Millionaires Tax.

There is no better example of Senator Long’s “behind the tree” saying than the sales tax.  Big business prefers to have consumers pay more rather than them, and big non-profits like healthcare providers don’t care where the tax dollars come from, so long as they are exempt from taxes and they keep getting increased taxpayer support for their growing bottom lines. 

Always the most regressive tax on the books, the sales tax has also been a sticky political and economic issue for Massachusetts because of our common border with New Hampshire.  Consumers of means have always been able to avoid it since they had the transportation options to take the drive north.  The billions of dollars which regularly leave the state due to consumer taxing incentives to invest elsewhere is obvious with the commercial development, the retail jobs, and the multitude of Massachusetts license plates in shopping districts north of the border. 

By Jon Hurst, President 

The Retailers Association of Massachusetts recently conducted public opinion polls by Princeton Research Associates to determine the views of voters and consumers in the Commonwealth about the state sales tax and about the fairness alternatives.  The results are interesting.  Following are the highlights.

• 95% of the voters view the retail sector as important for our economy. 
• 52% opposed sales tax collections on Internet sales, a view which would seem to be in conflict with the first bullet.
• Yet, a wide shift occurred when asked if they would support the sales tax on Internet sales IF it boosted local, small retailers, was coupled with a reduction in the tax rate from 6.25 to 5% or lower, and didn’t mean an overall loss in state revenues--61% then supported online tax collections.
• 60% also supporting a broadening of the sales tax to items like soda, if it was coupled with a sales tax rate cut.
• After having no Sales Tax Holiday in 2016, a whopping 79% said they strongly supported authorizing a MA Sales Tax Holiday.
• 56% supported applying the sales tax to nonprofits like universities and foundations if accompanied by a tax cut for consumers.
•  Given the upcoming “Millionaires Tax” vote, a very strong 79% said they supported a reduction in the sales tax to about 4%-4.5% to make the tax system fairer and to support local retailers.
• Given that nationally 18% of all holiday gift purchases this past year were made online—and many of those internet sellers do not collect the sales tax—83% said it was important to lower the 6.25% sales tax to help local retail shops.
• 78% of the respondents said it was important to provide some kind of sales tax relief soon.
• And finally 66% of the voters believe the proper sales tax range for Massachusetts would be in the 4% to 4.5% range.

Food for thought for our industry, our voters, consumers, and for Beacon Hill. 

The poll numbers are from two surveys; one conducted 11/11-14/16, N=495, +/- 4.4%; and the other 3/14-19/17, N=550, +/-4.4%

March 20, 2017 by Bill Rennie

Much has been said and written about Governor Baker’s $300 million employer Medicaid tax proposal, which when fully annualized over the course of the year projects out to more than a $600 million tax increase on employers, and rightly so, as that is a big number.  Less attention has been paid to another proposal in the budget that is also meant to generate significant revenue from employers by adopting what the Governor describes as a “Sales Tax Modernization Timing Change,” more commonly referred to as “real-time” sales tax collection.  The Administration counts on this change to bring in $125 million in the next fiscal year – another big number.  However, like the proposed Medicaid tax, the “real-time” proposal is flawed.

This sales tax timing change, included in Section 34 of the Governor’s FY18 budget, would require third party payment processors to collect and remit sales tax from retailers in real time, on all third party credit and debit card purchases.  Currently, retailers collect and remit all sales tax to the state, and they are responsible for the accuracy, reconciliation and auditing of their payments and accounts.  That process would continue under this proposal for all purchases made not using a third party credit or debit card, such as purchases made using cash, gift cards, checks, store brand cards, and split tender transactions. 

However, a second payment system would need to be built to accommodate the state’s “real-time” collection and remittance process.  Retailers, credit card companies, processors and even the state Department of Revenue would incur millions of dollars in new expenses to build out and maintain this new system – costs that would be passed onto consumers and taxpayers.  For what?  No “new” revenue is generated.  You’re just grabbing sales tax a month early, in what amounts to be a one month’s advance in your allowance.  How?   The Administration proposes for this section to take effect on June 1, 2018 – one month prior to the end of the FY18 fiscal year.  In doing so, the state would grab the sales tax due in July one month earlier, moving the funds from FY19 back into FY18.  It’s a budget gimmick that only works once, because then you’d be on a forward schedule – but you’d also have created yourself a new hole in the FY19 budget.  

January 26, 2017 by Jon B. Hurst, President

ObamaCare (ACA) is under the microscope for repeal and replacement this year in Washington DC.  And here in Boston, yet another state commission on healthcare provider prices is grappling with the fact that in the 11 years since we passed RomneyCare, our healthcare costs have annually increased about 4 times the rate of inflation.  Unfortunately for Main Street, those increases haven’t been spread equally either—small businesses and their employees have seen far higher premium increases than those experienced by big business or big government programs. 

Despite a good economy, these are troubling times in Massachusetts due to the interwoven healthcare cost issues affecting employers, consumers and taxpayers.   

Local small businesses, employees and consumers have seen their premiums rise far faster than their sales and family incomes.  RAM members have reported average annual premium increases of 12% each year over the past decade.  Likewise, state government has seen their costs for subsidized commercial and Medicaid plans under ObamaCare rise as well, as a significant number of consumers have made the ACA incented, financial decision to take the very generous, low cost, taxpayer subsidized options through the Connector. 

January 9, 2017  By Jon Hurst

Despite seeing consumer confidence levels unmatched for the last 15 years, retail sales in Massachusetts dropped 1% among the 4000 members of the Retailers Association of Massachusetts this holiday season (Nov-Dec).  The RAM survey exclusively measures small, locally based sellers, and does not reflect either national chains or online sellers.  RAM had previously projected a 3.9% increase over the prior year.  The disparity in the projection coupled with the strong consumer confidence levels raises the question whether consumers truly spent less this holiday season, or sent more of their dollars out of state to online sellers.

The slight reduction in sales breaks a string of 6 years of sales growth (’10-’15), which followed 3 years of sales reductions (’07-’09).  Although national figures will not be released until the end of this week, some national measures indicate another double digit increase for internet sales this holiday season, with as much as 18% of all purchases for gift giving going online.  The last minute shoppers this year may have also felt more confident in online shipping performance reliability than in prior years.

The concern for local stores is the fact that sales for most may be flat or down, yet costs are up—in some cases significantly.  From unfair application of the sales tax, to state mandated labor costs, rising health insurance premiums, commercial property taxes, and rents, the trends are truly troubling.    

NOV. 3, 2016 • BY BILL RENNIE

With early voting now a reality in Massachusetts, voters across the Commonwealth have already begun to make their decisions behind the ballot curtain. One of the questions they are being asked to decide is Question 3, An Act to Prevent Cruelty to Farm Animals.

Question 3 seeks to ban certain farm animal confinement practices from being employed in Massachusetts, but also to ban the sale of products – eggs, veal or pork – in Massachusetts that may have come from animals in other states that allow those confinement practices. So we’re not just talking about impacting local Massachusetts farm practices, we’re talking about products from farms around the country. A local retailer thus would be prohibited from selling any eggs, veal or pork that “the business owner or operator knows or should know is the product of a covered animal that was confined in a cruel manner.”

Huh? When you really think about that, how are retailers supposed to know for certain that they are in compliance with this requirement? Retailers will be wholly reliant on the word of the producers and manufacturers of these products. This raises significant concerns about exposure to potential liabilities, but also appears to violate the Interstate Commerce Clause. A similar (yet not as far reaching) ballot question passed a few years ago in California, and that law has been tied up in federal court ever since, currently being challenged along those same interstate commerce grounds. With regard to liability, the concerns are heightened for small, independent stores, which lack the legal and compliance staffing of the larger chains.

OCT. 17, 2016 • BY JON HURST

The results of our member survey are in, and it is clear that the Beacon Hill leadership decision to forego the Sales Tax Holiday this past August resulted in dramatic drops in local sales and hours worked, with no clear benefit to the state in increased taxed collections. This is no surprise to anyone who understands consumers and the rapidly changing marketplace driven by mobile commerce. RAM firmly believes the real winners of not holding the Massachusetts Sales Tax Holiday were the tax-free mobile commerce sellers.

In these times of 365 day a year government granted tax advantages of 6.25% to out of state sellers, the state chose to not give local employers a lousy 2 days to fairly compete on the same playing field. The state did not give our own residents the clear incentive to invest their important consumer dollars locally. And that decision backfired miserably for our local employers, their employees, and for the state.

The Sales Tax Holiday has always worked in Massachusetts because the sales generated by the state tax incentive would not have otherwise happened. Sales during the tax-free weekend come from: 1. recovered tax sensitive sales—in the early years sales brought back from NH, more recently recovered from the internet; and 2. from impulse buys generated from consumers who otherwise wouldn’t be shopping. What the bean counters on Beacon Hill don’t seem to understand, is that under neither of these two scenarios did the state lose any sales tax because these were sales we simply were not going to generate and keep in the local economy otherwise.

SEP. 26, 2016 • BY JON HURST
When corporate jobs leave the state for lower cost locales, it is front page news. If a hospital seeks to close a facility with empty beds, picket lines go up and politicians go on attack. If a hot new technology firm offers to locate a handful of jobs in exchange for tax breaks, the government welcome mat is rolled out.
Unfortunately, when a store or restaurant goes dark, little notice is taken except by the former customers and employees.

Consumers, elected officials, community leaders all talk about the importance of supporting small businesses and maintaining our historic, vibrant Main Streets. Yet what are they doing when it comes to really protecting, promoting and preserving local stores, and the delicate local shopping environments in which they operate? In a period of severe competitive pressures from mobile commerce growth, can we say that our government officials at the federal, state and local levels have really backed up their Main Street rhetoric with action? And are consumers really putting their money where it counts in order to keep those stores, restaurants and jobs in their towns?

We are all guilty of not always backing up vocal support of local stores with our dollars and our actions. The Retailers Association of Massachusetts decided that in these times of consumer spending transitions, new commercial developments, and the public policy focus on certain sectors such as the innovation economy, it is time to put a spotlight on store closures, job losses, and bad public policy decisions. Whether it be tax policy or labor mandates, many government policies unfortunately put our local stores at a severe competitive and cost disadvantage, and that discrimination has no place in the days of the smartphone.

DarkStoreFrontsMA.com is intended to highlight what is happening across the Commonwealth on the Main Streets, in the strip malls, and regional malls in our communities. When the stores go dark, the jobs disappear, as does commercial property tax revenues, community investment, and an important part of our community history and livability.

AUG. 2, 2016 • BY JON HURST
As is often the case, the recently concluded formal session of the Legislature featured some wins—mostly in the defeat of costly employer measures—but some losses, primarily the continuation of existing discriminatory policies, which either result in lower sales, or higher costs for local sellers.

One important win was the passage of a measure to keep the state’s innovative Small Business Health Insurance Cooperatives operating and serving employers of 50 and under. RAM operates one of the existing three co-ops in the state, and thanks the Legislature--in particular the House of Representatives--for recognizing the costly, discriminatory and unfair application of health insurance rates under federal ACA rules. In the Economic Development bill passed Sunday, an important section sponsored by Representative Kate Hogan (D-Stow) allows for new financial incentives to use wellness and provider transparency tools through small business cooperatives. In reaction to double digit premium increases for small employers following the passage of “RomneyCare,” the Legislature in 2010 authorized group purchasing through non-profit cooperatives with upfront premium discounts. Yet, those savings are evaporating under preemptive ACA requirements on state rate setting. The ACA required phase out of state rating factors, means no upfront premium flexibility remains to award employees for using wellness programs, or to shop around for the low cost, high quality healthcare providers—common practices for large employers. The new state legislation moves upfront premium incentives to the end of the insurance contract period in the form of rebates, which remains legal under federal rules. The section also encourages the Baker Administration to seek an Innovation Waiver from the federal government under the ACA to seek more flexibility and fairness for Massachusetts small businesses and their employees. Without rate flexibility and consumer financial incentives, small business health insurance premiums are more accurately labeled healthcare taxes.

Health insurance is a mandate which disproportionately disadvantages those who work for small businesses; and the cooperatives reform will help create more fairness. However, RAM is disappointed over the loss of two vital initiatives designed to ease other government imposed competitive discrimination, as they relate to the sales tax and to Blue Law restrictions.

For only the second time in the last twelve years, no Sales Tax Holiday was authorized for this August, meaning local sellers and our economy will lose hundreds of millions in sales to internet and New Hampshire competitors which enjoy 365 days a year of tax free sales. Those two days recover a remarkable amount of tax sensitive sales from consumers looking for a reason to invest their dollars locally. With accelerating mobile commerce growth—much of it untaxed—the 6.25% sales tax disparity is threatening the very future of our Main Streets and retail jobs in the Commonwealth. Government is picking winners and losers in the marketplace, and our losers are our local stores and employers.

JUL. 19, 2016 • BY JON HURST

Statement of Jon Hurst, President, RAM, on the loss of the Sales Tax Holiday:

It is very disappointing to hear that our elected leaders are walking away from the Sales Tax Holiday, an important consumer event that incentivizes hundreds of millions of dollars in spending here locally in the Commonwealth. The MA Sales Tax Holiday has for years allowed local sellers to recapture sales to tax sensitive consumers that would otherwise be lost to New Hampshire or tax free online sites.

With New Hampshire on our border, and a very tech-savvy consumer base – who increasingly is using their Smartphone to buy tax-free in just a few screen swipes – the consumer incentive to take advantage of the Sales Tax Holiday has been vital to keeping billions of dollars in the local economy.

JUL. 7, 2016 • BY JON HURST

Ask any small business owner what they need to be successful, to compete with big companies, to thrive alongside the new “innovation economy,” and to compete with smartphone sellers and they will likely tell you two things – higher sales and lower costs. And that is what RAM is pushing for in order to really help Main Street under the Economic Development bill making its way through the Legislature.

The following three issues are the best ways for state government to deliver on those higher sales and lower costs for our Main Street employers.

A 2016 Sales Tax Holiday

The Sales Tax Holiday (STH) has become an important event on the Massachusetts retail calendar and recognizes that consumer spending represents 70% of our economy. The key question is where do our consumers spend their money—locally, or in Silicon Valley or in NH? The Sales Tax Holiday is pro-consumer, pro-Main Street, and pro-retail employee. Consumers love it, and our Main Streets need it. Results have shown that during the STH weekend MA picks up hundreds of millions of impulse buys and recovered vital sales that would normally go to non-taxed locations in New Hampshire or online.

MAY. 24, 2016 • BY RYAN KEARNEY

The theft of property valued under $1,500 would become a misdemeanor in Massachusetts under a proposal passed in the Senate and now pending before the House. MA would follow the lead of 26 other states that have adjusted their felony thresholds, yet the five-fold increase proposed in MA exceeds the average threshold level of those states, which stands at $1,000.

While research conducted by the Pew Institute claims that there has been no increase in property crime in those states where a higher felony threshold has been adopted, retailers and law enforcement in California have begun to tell a different story.

MAY. 9, 2016 • BY BILL RENNIE

Over the past few years, an increasing number of Massachusetts cities and towns, roughly twenty or so at this point, have taken steps to regulate plastic bags. Early on, some communities adopted measures requiring plastic carry out bags to be of a certain thickness (mils), banning anything thinner than the standard they set in their ordinance or by-law.

Taking the issue a step further, an ordinance took effect last month in the City of Cambridge that prohibits so called, single-use plastic bags with handles at the point of sale, and instituted a mandatory minimum $0.10 charge for any bag that is provided to a customer, such as a paper, compostable or reusable bag. Now a statewide bill, H.4168, An Act to reduce plastic bag pollution, has advanced out of the Joint Committee on Environment, Natural Resources and Agriculture, that includes the mandatory $0.10 charge for any bag provided, but also bans outright ALL plastic bags – including the reusable plastic bags they’ve been telling us to use for years!

When did the plastic bag become Public Enemy Number One?

MAR. 31, 2016 • BY JON HURST

They said it would get rid of the free riders, require personal responsibility, and therefore prevent unfair cost shifts. They said it would mean lower costs as the newly insured would stop using high cost and unnecessary emergency rooms and instead go to the proper setting for the proper care. They said it would help our local hospitals by better managing federal Medicaid money, which in turn would help stop unfair cross subsidies from commercial payers to providers covering government funded patients. They said it would create more competition, choices, defined contribution options and lower costs for small businesses and their employees through a state exchange.

And so on April 12, 2006 Chapter 58, or “RomneyCare” was signed into law; to be essentially copied—but also in too many ways to be preempted by the ACA (ObamaCare) four years later.

It is important on this 10 year anniversary to look at the political promises of both RomneyCare, and then the national version ObamaCare, and to determine the outcomes. In truth, none of the above promises have been achieved; but rather the consequences have created huge cost increases for small businesses, while enriching the largest providers and pharma companies. And looking back at the big money interests behind the efforts on both Beacon Hill and Capitol Hill, are we really surprised?

MAR. 14, 2016 • BY JON HURST

Maybe crime really does pay. At least it would under legislation recently passed by the Massachusetts Senate which increases the felony threshold contained in a number of our property crime statutes from $250 to $1,500. It allows fraudsters to run up $1,499 in charges on your credit card and thieves to steal or destroy up to $1,499 of your personal property with no risk of receiving meaningful repercussions. It also emboldens professional and sophisticated criminals who treat theft as a low risk, high reward activity due to our already weak criminal laws. It essentially decreases their cost of doing business while increasing the price you pay for consumer goods.

Annually, the Massachusetts retail industry loses an estimated $750 million in stolen merchandise, potentially worth $46.8 million in lost sales tax revenue. A cost shared by you in the form of higher prices—approximately $400 per household. The majority of these losses are attributed to organized crime rings using proceeds to fund other criminal activities including drug trafficking, arms dealing and even terrorism.

JAN. 28, 2016 • BY JON HURST

For many years now, RAM has asked our state leaders to reform costly and anti-competitive laws which hurt our local employers and benefit out of state and new technology competitors. The antiquated Massachusetts Blue Laws prevent higher sales, and make it far more costly to serve your customers, meaning less operating hours, slimmer margins, and higher prices. We asked the prior Governor to fix the discriminatory Sunday premium pay requirement, and didn’t get it. Last year, I served on the Baker Administration’s Economic Development Planning Council and specifically asked for this reform.

Today the Baker Administration filed their Economic Development bill without the requested retailer Blue Law reform, and even more surprising and disappointing was the fact that the online sellers—like Amazon—did get a clarification in the bill that they don’t need to adhere to the Blue Law requirements.

Millions of Massachusetts taxpayer dollars have been given to Amazon by the state to locate warehouses in the Commonwealth, and now Governor Baker has proposed to clarify that Amazon is not a retailer, and therefore not required under the Blue Laws to pay time and a half on Sundays. Not included was an equal reform or exemption for real Massachusetts retail employers on Main Street or in struggling malls. To say RAM is disappointed in the Baker Administration is an understatement.

JAN. 22, 2016 • BY RYAN KEARNEY

The following letter to the editor appeared in the Boston Herald's January 22nd print edition. It was prepared in response to a previously published Herald Op-Ed discussing the inherent flaws of the "Fight for $15" campaign. In addition to the general concerns identified in the Op-Ed, the LTE shines a light on two major outliers in Massachusetts wage law which would result in additional costs to the reatil industry in the event a $15 minimum wage proposal proved successful.

$15 mandate goes too far

The Herald is correct in saying that “the ‘Fight for 15’ campaign is flawed” (“Wage protest on radar,” Jan. 19). Presented as a grassroots social movement, this union-led campaign is designed to accomplish through one-size-fits-all legislation what its leaders could not accomplish at the negotiation table. This approach ignores the negative economic impact to small employers — our primary engine for new job growth — who will struggle to afford new labor costs. The result will be fewer job opportunities for the very workers the campaign claims to support.

JAN. 19, 2016 • BY JON HURST, PRESIDENT

Last summer I paid a considerable sum to have my house painted by a local, North Shore painting contractor. But the money was worth it, and I was pleased not only with the quality of the work, and but also with the fact that the contractor bought all the paint from our local RAM member, mom & pop hardware store. The local economy benefited, as did the taxman because the contractor didn’t take the trip to NH or go online to buy that large quantity of paint in order to avoid the 6.25% sales tax. But it got me thinking, where is the tipping point that pushes a contractor or a do-it-yourselfer to decide to take that ride north of the border to avoid higher, government imposed costs?

Being debated in the Massachusetts Legislature is a bill (S2052) that may indeed be that tipping point which pushes sales away from our local hardware and paint stores. Written by big paint manufacturers trying to pass the buck to consumers on the cost to fund their industry’s product collection and recycling program, this new tax on top of the state sales tax will push the cost differential between a Massachusetts and New Hampshire store for a gallon of paint to around $4 per gallon.

Although a few other states have passed this industry model bill being peddled by paint manufacturer lobbyists, I wonder if those manufacturers have stopped to consider what the very detrimental impact will be on their Massachusetts retailer customers, which must deal every day with the competitive pressures of non-taxed sellers. The reality is that just as consumers can easily avoid the sales tax by a quick drive or a few strokes of the smartphone, so too will they be able to avoid this paint tax.

JAN. 6, 2016 • BY BILL RENNIE

On December 22, 1982, Governor Ed King signed a bill into law to allow retail stores to open on Sunday. The law required that most retail employees also be paid time and a half wages for voluntary work on Sunday. The minimum wage in 1982 was $3.35. Music fans were shopping in record stores for Michael Jackson’s newly released album, Thriller, on cassette tape.

Times have changed. The economy has changed. There are almost no record stores left and cassette tapes are obsolete. Yet, the Sunday premium pay law lives on. With the Massachusetts minimum wage set to increase to $10.00 on January 1, the minimum wage on Sunday for a 16 year old cashier will be $15.00 an hour, while across the border in New Hampshire the minimum remains at $7.25. By 2017 it will increase to $16.50. Sundays in retail have become unaffordable in Massachusetts.

Retail is the only industry in the Commonwealth required by law to pay a Sunday premium. No other sector – hospitality, government, health care, entertainment – is required to do so, and only one other state, Rhode Island, shares this requirement.