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    Northeast Regional Report

    New York retailers seek to rollback tobacco registration fees; Pennsylvania retailers get break on non-fire-safe cigarette sales; New Hampshire grocers win right to sell spirits; and Vermont gas tax hike kicks in early.

    By Hank Behar

    Five months ago CSNews Online reported on New York State’s threat to boost the $100 tobacco registration fee for retailers to unheard-of levels—up to $5,000 a year in some cases.

    Well, it happened. The state legislature did raise the fees, basing them on sales volume. A retailer with between $1 million and $10 million in sales, for example, will pay $2,500 annually, an increase of 2,400 percent. One with sales above $10 million will pay $5,000, a boost of 4,900 percent.

    But that may not be the end of the story. In a unique show of unanimity, nine associations representing New York state retailers banded together to launch "Operation Rollback," an industry-wide campaign to un-do the increases.

    "Unless these fees are rolled back, thousands of neighborhood retailers are going to have to forfeit the tobacco category," said James Calvin, president of the New York Association of Convenience Stores (NYACS). "And when that happens, many of the displaced smokers will shift their purchases to unlicensed sources of tobacco, further eroding the state’s tax revenue. In addition, with fewer customers coming through our doors, lottery sales will suffer, resulting in less state revenue for aid to education. No small business should be forced to pay 10 to 50 times more in license fees, especially in the midst of an economic downturn."

    "In addition, it’s appalling to saddle law-abiding retailers with exorbitant fees while competing Native American stores—many of which sell 50 times the volume of cigarettes we do—are allowed to sell tobacco to New Yorkers without getting a state license or paying any fee at all," he said.

    To activate "Operation Rollback," an online system was set up for use by retailers in sending a pre-written message to their state senate and assembly members, calling for action. The address is www.votervoice.net/groups/nyacs.

    For background and additional ways for retailers and others to contact their state officials, they are asked to visit www.nyacs.org/OperationRollback.htm.

    House Bill 1342 passed unanimously by the senate and house of the Commonwealth of Pennsylvania and was signed into law by Governor Ed Rendell, giving retailers an extra year to sell their stocks of non-fire safe cigarettes.

    Originally, retailers had to sell impacted cigarettes by July 1, 2009, but since many retailers had placed orders for the cigarettes before last year’s law was passed setting the July 1, 2009 date, they were in danger, through no fault of their own, of being stuck with the inventory.

    Now they have until July 1, 2010 to sell it.
    "This is a great victory for retailers and the Pennsylvania Food Merchants Association/Pennsylvania Convenience Store Council," said David McCorkle, president and CEO of PFMA. "We worked hard for this legislation and we're grateful to Rep. Dick Stevenson for introducing it, for the support of Tim Solobay, and to Randy St. John, senior vice president of association services in our office."

    Pennsylvania is one of 20 states that have passed legislation requiring the sale of only fire-safe cigarettes.

    Chalk up a victory for the New Hampshire Grocers Association (NHGA).

    "Our primary focus at this year’s legislative session was to get permission for food stores to sell spirits," said John Dumais, president and CEO of the NHGA, "Currently we can sell only beer and wine. Specifically, we wanted the liquor commission to allow more than 1,000 grocery stores to be replacements for the underperforming package stores the commission sought to close of the 77 it operated. We also campaigned to expand our days and hours of service. And the Legislature went along—to a limited extent—allowing three stores to have this right. In the end the number was increased to eight, and while this doesn’t satisfy our association, we have vowed to continue the expansion into next year and beyond, if necessary."

    In the meantime, the state, in its budget deliberations, trod the well-worn path toward sin taxes, raising the cigarette tax 45 cents. That brings the total levy to $1.78 per pack, a 34-percent boost. It also expanded tobacco taxation to other tobacco products, including cigars costing less than $2.

    The highest cigarette tax in the nation is now owned by Rhode Island at $3.46 a pack—the lowest is South Carolina’s, at 7 cents.

    On a brighter note, some onerous tax changes that were in the offing were successfully dodged. The Business Profits Tax credit was retained, and among the changes that were not implemented, were a new Capital Gains Tax, Estate and Legacy Tax, Real Estate Refinancing Fees and an Entertainment Tax.

    But if the economy doesn’t turn around, any of them could resurface at next year’s session.

    Tax increases usually get launched July 1 in Vermont, but this year a 3.3 cents per-gallon hike in gasoline taxes kicked in June 1, to help make up declining tax revenues.

    However, July 1, will still remain the debut day for other new taxes, such as the state’s first-time 6 percent sales tax on hard liquor, raising fears that heavy traffic will be generated in the direction of tax-free New Hampshire by seekers of spirits.

    And then there’s tobacco, where a 13-percent boost in taxes also bows July 1. But mixed in with the news of taxes new and taxes grown, is the announcement seen in The Grocery Slip, the newsletter of the Vermont Grocers Association, that next year the 24th Annual Best Bagger Championship contest will switch from paper and plastic to reusable bags.

    The Best Bagger Championship is a nationwide program in which the best-of-the-best grocery baggers in the country compete for prizes and the title of America’s Best Bagger. Contestants are judged on speed, style, attitude, appearance and bag-building technique, including weight distribution between bags.

    The Championship will be held at the National Grocers Association Annual Convention and Supermarket Synergy Show at the Paris Las Vegas Hotel on Feb. 11, 2010.

    Vermont’s competition, on the agenda of its September convention, will also switch to reusable bags.

    The federal tax on gasoline is 18.4 cents a gallon, the same in all 50 states. But a drive through New England, starting in New Jersey and ending in Maine, vividly illustrates the effect of state taxes on the price at the pump.

    If there were no state taxes, for example, Connecticut’s price would be the third lowest in New England, tied with New Hampshire and Massachusetts.

    But pile on the state tax, and Connecticut’s gasoline prices are elevated to among the highest in the nation, and the second highest in New England.

    Only Alaska, California, Hawaii and New York have higher gasoline prices than Connecticut, where, on June 27, the average price of a gallon of regular was $2.80. Hawaii’s price topped the list at $3.10 a gallon.

    "At 35.3 cents a gallon, our state tax is one of the highest, and now, with the passage of the Markey-Waxman bill in the house, there is the danger that the cost of energy will climb even higher," noted Gene Guilford, executive director and CEO of the Independent Connecticut Petroleum Association (ICPA). "Only the senate stands in the way of the bill becoming law, and we at ICPA are working hard to see that it makes the changes that are needed. Our goal is make certain the impact of higher energy costs from that law are mitigated to the maximum extent on all consumers of all energy sources—equally and fairly across the board.

    "In addition, given Connecticut's almost $9 billion deficit in the next two-year budget of $36 billion, ICPA is working just as hard at the state level by distributing more than 110,000 bill-stuffers through our membership to consumers," said Guilford. "We are asking them to join us in making sure Hartford knows that in the midst of climbing unemployment, company lay-offs, business closures, home foreclosures and the worst recession in more than 70 years, this is not the time to raise revenue through higher energy taxes."

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