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    Northeast Regional Report

    Retailers face cigarette tax hike, health insurance fees, and RFID technology ban.

    By Hank Behar

    Maine faces a hike in cigarette taxes that would make it the highest taxed state in the nation, and, if that's not enough, its bottle laws, which are the country's most expansive, may be made even more stringent. In Vermont, a fee may be levied on employers for each employee not covered by health insurance, while New Hampshire faces a ban on RFID technology

    The governor of Maine is planning to throw another fast one at the petroleum marketing and convenience store industry in his state, and it could very well be the third strike that will put many of them out of business. It's coming in the form of a dollar hike in the state's cigarette tax, which will boost it to $3 a pack, making Maine the state with the highest cigarette-taxes in the nation.

    "Our cigarette tax will then be $2.20 per pack more than our neighbor New Hampshire," noted Jamie Py, president of the Maine Oil Dealers Association, "and New Hampshire already has two strikes against us in the form of a gasoline tax that's 9 cents a gallon lower than ours, and no sales tax. You don't have to be the Secretary of the Treasury to figure out what that will do to our stores near to the New Hampshire border, since tobacco accounts for 35 percent of most c-store sales. We can't understand what the governor hopes to achieve with this item in his budget. It will hurt our dealers, lower sales and reduce tax revenues to the state; it's a lose-lose situation all around."

    Py is hoping to build support against the tax by focusing on it as a small-business issue, rather than one restricted to c-stores, and is asking his association members to contact their state legislators to modify the item in the budget. It comes up for a vote at the end of March, and if it goes through without a change, the new tax will go into effect July 1.

    Also under scrutiny in Maine are the state's bottle laws. Although it has one of the most expansive bottle laws in the nation, it is currently considering various modifications that will hopefully improve the redemption process and reduce fraud. To make certain that proposed legislation along those lines proceed on the right track, the Maine Grocers Association (MGA), headed by executive director Amie Joseph, has formed a Bottle Bill subcommittee to work with "interested stakeholders and bill sponsors to make sure MGA members are not adversely affected."

    Joseph points out that one piece of legislation would ban the use of bottle scanners and hand scanners in order to reduce fraud by eliminating the potential to redeem a bottle more than once. Another proposal would require RVMs (Reverse Vending Machines) to scan the UPC labels and then cancel them to avoid multiple redemptions. And another would require anyone who redeems more than 480 bottles to provide proof of Maine residency; and if they redeem more than 1,000 bottles, they would have to sign a declaration that all the bottles were collected in Maine.

    Health Insurance Fees
    Meanwhile, in Vermont, there is a bill in committee that would require employers to pay a $365 annual assessment for each full-time equivalent employee who is not offered health insurance by his or her employer. Its purpose is to provide health insurance to the state's 30,000 residents who are not covered.

    "The sticking point," said Jim Harrison, president of the Vermont Grocers Association (VGA), "is what to do about part-time employees who already have health insurance from another source, such as parents or college or who have private policies. It would be defeating the purpose of the bill, and levy an unnecessary and burdensome expense on employers, if they were forced to cover employees who are already covered."

    Harrison will be lobbying against this provision in the bill throughout the legislative session, which is scheduled to run through June.

    RFID Ban
    An old issue has resurfaced in New Hampshire -- RFID (Radio Frequency Identification), the method by which a tiny tag is attached to a product and tracked electronically as it travels through a manufacturing plant or a retailer. It's one of the oldest technologies of the computer age, and is being rediscovered as a prime tool in managing inventory and loss prevention.

    Recognizing it as such, the New Hampshire state legislature set up a two-year study to evaluate its usefulness, inviting the New Hampshire Retail Grocers Association (NHRGA) to join the study committee, whose report is due in 2008.

    "But a legislator has jumped the gun and introduced a bill outlawing the use of RFIDs altogether, claiming it violates privacy rights," said John Dumais, NHRGA president. "This is a full year before the study has been completed.

    "The bill is due to be voted on at this session of the legislature," Dumais added, "and we are opposing it because if it passes it will be a serious blow to our efforts to bring the technology to our state and its retailers." The legislative session is due to run until June.

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