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    NORTHEAST UPDATE

    Vermont faces possible sale of its lottery system to Wall Street, while Connecticut gets the word out on gas taxes, new "revenue enhancements" loom in New York and Maine calls for fairness in credit card interchange fees.

    By Hank Behar

    Vermont

    Watch out for unforeseen consequences, sayeth the wise -- but then, sayeth the wiser: How can you watch out for them if you can't see them?

    And that's where the retail grocers of Vermont stand right now on the governor's proposal to "lease" the state lottery to Wall Street investors.

    "Grocers are the prime sellers of lottery tickets," observed Jim Harrison, president of the Vermont Grocers Association (VGA), "and they want to know what will happen to them if the proposal goes through. Will their commissions change? Will small stores be squeezed out of the system? Will different outlets be allowed to sell tickets, reducing grocery sales?"

    Vermont grocers are leery of the proposal. Others are not, but the matter is moot, since there's not much enthusiasm in the state legislature for the idea. It's worried that even though the state will get a one-time infusion of $50 million followed by $25 million annually for education, the state will end up with a "Las Vegas" style lottery system over which it will have no control. Besides, they ask: If investors can make more money running the lottery, why can't the state?

    The VGA hasn't taken a position on the idea yet but if it's ever taken up seriously by the House Ways and Means Committee, Harrison wants legislators to include the VGA and its members in discussions.

    Connecticut

    "Right now," said Gene Guilford, executive director of the Independent Connecticut Petroleum Association (ICPA), "drivers in Connecticut are paying 63.03 cents in taxes on a gallon of gas. So when gasoline jumps the $3 barrier and sells for $3.19, as it has recently, not many consumers know that almost 20 percent of that is taxes.

    "But we don't want people to blame the retailer, who isn't making much on gasoline sales any more. Credit card companies are making more in fees that are higher than the profit margins of many retailers. So one of our jobs is to get the truth out to the public. And it's quite a challenge."

    One of the ways the ICPA is meeting that challenge is by furnishing gas retailers with pump stickers that give drivers something to read while they're filling their tanks. Another is through communications such as email messages to the media and state legislators.

    The e-mails may have borne fruit. Larry Miller, state representative from Shelton, is proposing that the automatic increase in wholesale gross receipts scheduled to increase from 7.53 percent to 8.11 percent on July 1, 2008, be rescinded. It's too early to tell if Miller's proposal will go through, but Guilford and the ICPA will be following its course. The state legislature went into session on Feb. 6.

    In the meantime, Guilford is encouraging Connecticut's petroleum marketers to attend the three-day Atlantic Region Energy Expo (AREE) in Atlantic City from April 22 to 24. "It's one of the East's largest energy conventions/trade shows, and Connecticut's ICPA is a founding member," said Guilford. "Companies can register for $350, which allows them to send an unlimited number of representatives from one location. It's a way to get an understanding of the changing marketplace and discover new business strategies. And if you want to add some golf to the experience, there's a golf outing the day before, on April 21." Call (973) 467-1400 for details.

    New York

    It all depends on your perspective. "I'm firm, you're stubborn, he's pig-headed," goes the old saw.

    Enter Gov. Spitzer of New York. His new budget called for $189 million in additional costs that will fall on the backs of retailers and customers.

    "These aren't new taxes," says the governor. "They're revenue enhancements."

    But James Calvin, president of the NY State Association of Convenience Stores (NYACS), brought a different perspective to the discussion when he testified at the Joint Legislative Hearing on the 2008-2009 Budget: "Thank heaven there are no new taxes," he said, "[but] of course there are a few surcharges, fee increases, penalty increases, tax 'reclassifications' and 'reforms' that combined add up to $189 million..."

    And in case the governor failed to appreciate the irony, Calvin went on to list of few of the "revenue enhancements:"

    -- Reclassifying Smirnoff Ice and other flavored malt beverages as liquor rather than beer, thus raising the tax from 11 cents per gallon to $2.54, a boost of 2,210 percent. Result: $15 million in additional taxes.

    -- Expanding the bottle bill to noncarbonated beverages. Result: $25 to $100 million in additional costs (not to mention the new mounds of unwashed beverage containers compromising sanitation, especially in small stores that have no place to keep them).

    -- Consolidate and "reform" state and local taxes on petroleum products to create a new "unified" excise tax on motor fuel. It’s an idea NYACS supports, but not how the budget proposes it, which will cost taxpayers $13 million more next year, and $56 million annually thereafter.

    -- Reclassifying "little cigars" as cigarettes. Result: $3.6 million in additional taxes.

    And if that's not enough of a reality check, there is, according to NYACS' estimate, a $500 million revenue stream already available to the state in the form of uncollected taxes on gas and cigarette sales by Native American retailers to non-Native Americans -- revenue that the administration conservatively estimates as $200 million, but which it has nevertheless unilaterally decided to forego.

    Calvin ended his testimony with a series of suggestions that called for the rejection of the "not-a-tax" surcharges and reclassifications, rejecting the motor fuel tax "reform" scheme, enforcing the tax collection law, and telling the governor to "quit nickel-and-diming small businesses to death while talking about stimulating economic growth" -- this last item refers to a $50 annual registration fee to the Tax Department by stores that collect sales taxes, "as if they don't already know who we are."

    On Feb. 12, the day after Calvin's testimony, the governor proposed 21 amendments to the budget, none of which addressed the concerns raised by Calvin and the NYACS. Until the final budget is written, NYACS is committed to continued opposition to new taxes that are disguised as "revenue enhancements."

    Maine

    Amie Joseph, executive director of the Maine Grocers Association (MGA), has notified MGA members of the recent Action Alert issued by The National Grocers Association (NGA) on unfair credit card interchange fees.

    The NGA is calling for a grassroots effort to encourage legislation that will enable retailers to negotiate fair credit card fees with Visa and MasterCard, and restore competition to the credit card system.

    "American consumers pay a hidden fee in the groceries and other products they buy," says the NGA, "whether or not they use credit or debit cards."

    Director Joseph advises MGA members to call their House and Senate representatives to express their concern. "It's very easy to make your voice heard," says Joseph. "Just call the House switchboard at (202) 225-31321 or the Senate switchboard at (202) 224-31321, and ask for the office of your congressman or senator. It's as simple as that. Tell them we need legislation so we can negotiate better terms to end abuses in the current one-sided credit card system. We know that if representatives get no calls they'll do nothing -- but the more calls they do get the better chance there is for reform."


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