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Retailers Find a Variety of Partners in the Midwest

People made the difference in getting the Iowa legislature to drop a tax increase, while retailers in Ohio and Indiana had to go through some highs and lows in their state capitols. In the meantime, a new program debuts that makes it surprisingly easy for Ohio c-stores to get into foodservice.

The only thing that could have prevented the Iowa state legislature from doubling the cigarette tax from 36 to 72 cents a pack was the people, and, lo, the people prevailed. The bill failed, with a little help from a friend -- the Iowa Grocers Industry Association (IGIA), which organized a protest campaign that was so successful it could serve as a model for other retail associations around the country.

"We decided to reach out to consumers right in our members' stores and give them the tools to contact their legislators," said IGIA president Jerry Fleagle. “We did this by providing our stores with two items: flyers to distribute to consumers, listing the 150 state legislators and their home telephone numbers, and a 'how-to' letter of instructions to the stores on how to carry out the campaign.”

The flyer given to consumers was headlined: TOBACCO CONSUMER ALERT: DON'T LET LAWMAKERS TAX YOU UNFAIRLY! It told shoppers to call their legislators at the state capitol from Monday to Thursday and at their homes from Friday to Sunday.

"We attended to every detail," said Fleagle. "We told the stores to highlight the names and phone numbers on the flyers of their nearest state legislators so shoppers could see immediately who to call, and to remind cigarette buyers that the tax increase would cost them $720 a year if it passed. And it worked. The tax increase was dropped.”

Over in Ohio, the picture looked a little different.

"We think the new Ohio state budget embodies not only the worst possible tax policy for retailers, hitting the high-volume, low-margin operators the hardest, but that it's so manifestly unconstitutional it may end up in the Supreme Court for final adjudication."

Those were the indignant words of Tom Jackson, president and CEO of the Ohio Grocers Association. "But," adds Jackson, "we did manage to forge some important victories in the battle of the budget. We killed a proposal to raise the kilowatt tax 30 percent, for example, which would have cost retailers anywhere from $1,500 to $5,000 a year per store in increased taxes. And we were able to retain the retail sales tax collection allowance of 0.9 percent, against those who wanted to reduce it to 0.75 percent. We also got the legislature to phase out the tangible personal property tax on inventory and furniture and fixtures over the next four years.”

Elsewhere in the Buckeye State, Nate Willison, executive director of the Ohio Association of Convenience Stores, lauded one feature of the new budget: the exemption of gasoline from the newly enacted commercial activities tax (CAT).

“CAT levies a tax on gross receipts,” explained Willison, “which hits gasoline retailers hard, since petroleum products would have been taxed several times before they get to the retailer. Fortunately, by our memberships' involvement and lobbying legislative leaders, we were able to get gasoline exempted from the tax for two years.”

Credit Roger Dreyer, president of the Ohio Petroleum Marketers Association, with getting the legislature to commission an industry group to determine the next steps after the two-year exemption expires.

“It's a lot better if those of us in the industry have a hand in suggesting what happens when the two years are up than if the legislature just rushes in to fill the gap with a new tax that may be harmful to petroleum marketers in Ohio. We know the business better than they do, after all, so we hope to set up guidelines that will be fair and equitable all around,” said Dreyer.

Would that a similar commission was functioning in Indiana. “Chaos” was the one-word prediction of what would happen there when two new laws went effect on July 1, guessed Joseph Lackey, president of the Indiana Grocery and Convenience Store Association. The reasons: Lack of urgency by the state and insufficient lead time on guidelines for retailers to follow.

"One of the new laws is an anti-meth law," explains Lackey, "which has several new stringent requirements that are not in the law but were added by the state police, such as signatures of buyers and adding up milligrams sold at each transaction. Yet the state has given us no advance information to enable us to implement the law, such as the forms to use.

"The second law is nicknamed the "Dome Tax" because it's designed to raise money for a new Colts stadium by imposing a 1 percent tax on food and beverages on the seven counties surrounding the stadium. But insufficient provisions have been made as to how to collect the tax, definitions of what items are taxable, and where to send the money once we collect it.”

Sure enough, there were issues with the anti-meth legislation on July 1: Click here for more information.

Finally, for c-stores in Ohio that want to add foodservice to their operations but lack the know-how and equipment, the Great Lakes Petroleum Retailers and Allied Trade Association (GLPRATA) has an offer that may be hard to refuse.

Launched on June 21 of this year, a new partnership between Sara Lee and GLPRATA offers Association members a turnkey foodservice program that includes free equipment and one month's free inventory of Sara Lee products in five categories covering ready-to-eat breakfast, lunch and snack items, plus a lineup of dairy case products.

"We negotiated a tremendous, exclusive deal for our members," said Paul Elhindi, chairman of the buying group and a director of GLPRATA. “It's designed to allow stores with limited space the opportunity to add foodservice to their operations, with profit margins that historically range from 40 to 55 percent."

GLPRATA, with over 1500 members, covers Ohio and Michigan, but the offer is available to Ohio members only at the present time. Interested parties can contact their GLPRATA rep at 800-748-0060 for details.

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