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In the eyes of many Ohio retailers, it would be another step toward indentured servitude if the governor's new budget goes through unchanged. Embedded in the budget is a provision vastly reducing -- and for all intents and purposes, eliminating -- the retail vendor allowance for collecting and remitting sales taxes.
"It's the same as a pay cut," said Tom Jackson, president and CEO of the Ohio Grocers Association (OGA). "Can you imagine the uproar if thousands of workers in Ohio were given a cut in pay, but were expected to work just as hard and as many hours as they did before. It's absolutely shameless and we at OGA, as well as many other organizations, are rallying to get the provision removed from the budget." Weapons being deployed are press conferences, actions by editorial boards, grass roots efforts and "good, old fashioned lobbying."
Presently, retailers are receiving 0.9 percent of sales taxes collected, with no limits. The budget, on the other hand, calls for retailers receiving 1 percent of sales taxes collected, up to a maximum of $30 per retailer, which is 1 percent of $3,000 in sales taxes collected.
In Illinois, care owners are bracing for the worse. "The governor's tax proposal will add 4 to 8 cents to the price of every gallon of gas," said Bill Fleischli, executive director of the Illinois Petroleum Marketers Association-Illinois Association of Convenience Stores (IPMA-IACS), in sounding the alarm against the governor's proposal for a Gross Receipts Tax which will levy a 0.5 percent tax on all retail and wholesale firms with revenues above $1 million, whether they make a profit or not, as well as 1.8 percent on all other businesses.
It would earn the distinction of being the largest tax increase in the history of the state, according to the Illinois Chamber of Commerce, prompting it to set up a new Web site with a most appropriate address: www.largesttaxincreseever.com. Visitors will learn about the proposal and how they can fight it with a $400 contribution to the Petroleum Political Education Committee of Illinois (PPECI), which is spearheading the movement against the proposal (it hasn't been formulated into a bill yet).
April 18 has been declared Gross Receipts Tax Lobby Day in Springfield, Ill. On that day, state employers will go to the capitol to press the legislature to reject the tax increase. A general session at the Springfield Hilton will start the day at 10:00 a.m. with presentations from tax experts, economic developers and business representatives, followed by a media event and afternoon visits with legislators at the Statehouse. The day should conclude by 3:00 p.m.
Fleischli advises those who market on the border with other states that "You need to see those senators and representatives who represent the border areas because this will put your small businesses at a drastic completive disadvantage."
Summing up the overall sentiment against the tax is a statement in an ad placed by George Jacob of Brewers Distributing: "This is nothing more than a tax on some of the lowest-paid people in Illinois."
In Indiana, bill HB 1646 was passed by the House 99-0, giving retailers year-end tax credits, depending on the amount of alternative fuels they sell over the year.
But in the opinion of the Indiana Petroleum Marketers & Convenience Store Association (IPCA), a year-end tax credit is not advisable because it will have little impact on the decisions a fuel retailer makes whether or not to offer a conventional 90/10 blend of fuel.
What's needed instead, says IPCA in its March 12 Insider Report, is a tax credit with a "real time" basis so that the retailer can gain an immediate tax credit by offering a lower pump price. This will enable consumers of alternative fuels to realize some of the benefits of the tax credits sooner.
IPCA's position is in favor a making a 10-cent tax credit available to marketers depending upon the percentage of alternative fuel that is used. For instance, E85 blends would receive an 8.5-cent tax credit; E10 would receive a penny tax credit; B5 would receive a half-cent credit; and B20 two cents.
IPCA feels that the state can make greater progress if legislators call on the expertise of those in the petroleum marketing industry for guidance, citing HB 1646 as a good example of a bill that should have been written differently before it was put up for a vote.
HB 1646 is not yet law, since it was passed only by the House; it is now pending before the Senate Tax and Finance Committee.
Mike Rud, president of the North Dakota Petroleum Marketing association (NDPMA), feels that the way to alternative-fuel-sanity is to first establish a federal policy, and then have the states follow suit. "Otherwise," said Rud, "individual states can hand down mandates that are unrealistic and, in many cases, impossible to comply with.
“In North Dakota, for example, some bills have called for the installation of blender pumps that allow for the sale of greater than E10 gas. The problem is that of the 850,000 vehicles in North Dakota, only 15,000 or so are flex-fuel, capable of using greater than E10 fuel. That means it will cost most marketers about $100,000 to install a tank, pump and all other items associated with putting a 'blender' in place to meet a mandate that only 2 percent of the state's cars can take advantage of -- so the market just isn't there to justify a ruling like that.
"But,'' Rud noted, "when it comes to E10, which every car can use, about 85 percent of our gas stations carry it, so sales of E10 in North Dakota have increased 300 percent since 2001, proving that the marketplace does work when conditions are right.
"The NDPMA fully supports research into the increased use of ethanol and other alternative fuels,'' Rud said. ''We want to reduce our dependence on imported oil as much as everyone else -- but we need a universal approach to the problem, and that can only be achieved with a uniform set of rules set by the federal government that the states can follow. We need leadership and that has to come from Washington.''