April 16, 2013
Key Issues and Policy Positions
The mission of the Minnesota Retailers Association (MnRA) is to promote, preserve and enhance an essential retail industry in the state by developing public policy. MnRA has carried out that mission for sixty years by taking a leadership role in promoting free market ideals at the state capitol. Below are a few of MnRA's key issues and positions for 2011 that are established and prioritized by MnRA's Legislative Committee every November.
Main Street Sales Tax Collection Fairness
Minnesota retailers continue to operate on an uneven playing field with remote-only competitors with regard to the collection of sales tax. In Minnesota, "brick and mortar" retailers are required to collect and remit state and local sales taxes due from consumers on their purchases. Remote-only competitors are not required to collect the same taxes and continue to exploit a decades-old loophole in the tax system. It is time to modernize the tax system for the 21st century marketplace.
- Legislation that provides an equitable solution to the collection of sales tax between on-line sellers and Minnesota retailers.
PIN-Protection for Consumers
In Minnesota, the largest banks have chosen to issue debit cards that allow point-of-sale transactions to process only as a signature-based debit transaction and do not readily offer the consumer the choice to process a transaction with a PIN-based debit card at a merchant point of sale. Banks in 46 states readily offer the consumer the option for PIN-based debit transactions.
- A measure that would require issuers to give consumers a pin-based option on all debit cards for point of sale transactions while allowing small businesses the choice to accept PIN-debit to reduce costs.
Debit Card Fee Charging Fairness
Visa and MasterCard fix prices for their banks and have thousands of pages of contract rules that greatly interfere with small businesses' ability to make decisions about the way they run their business. Contract terms are entirely non-negotiable and can change at any time without direct notice from the payment networks, making these contracts unlike any others businesses face. Merchants either accept the terms or choose not to accept the card's network brand. For most retailers, large and small, not accepting cards is no more of an option than not accepting cash. Debit cards are essentially electronic forms of paper checks which should "clear at par". However, retailers are required to pay an iniquitous fee for processing debt cards.
- Legislation that would enable retailers to more fairly negotiate contract terms with payment networks. Measures that would allow merchants the ability to offer discounts to consumers who choose to pay with one form of payment (like cash or debit card) over another.
- Legislation that would shift additional costs and compliance burdens to merchants in instances of fraud or data breach.
Organized Retail Crime (ORC)
Different than shoplifting, organized retail crime typically is a large-scale criminal operation involving individuals or teams of sophisticated, well-connected criminals with specific roles who steal products with the intent of selling them for a significant profit to fund criminal activity and/or lifestyles. ORC involves professional crime rings that target popular household items like consumer electronics, DVDs and games, infant formula and over-the counter medications that they can easily re-sell. One industry survey indicates that almost 90% of retailers nation-wide reported being victimized by ORC in 2010. ORC harms large and small retail businesses alike, in the metro area and in greater Minnesota. ORC also creates consumer safety issues. Consumers who unknowingly purchase stolen products from third party websites like Craigslist or Ebay have no way of knowing if they are getting a safe and reliable product.
- Legislation that would deter organized retail crime rings from operating in Minnesota and allow law enforcement and prosecutors to go after both ORC ring leaders and repeat ORC "boosters."
Energy and Conservation Issues
A reliable supply of competitively-priced electricity is critical to all retail businesses. It is not only necessary to maintain current infrastructure but to also enhance existing electric generation, transmission and distribution systems. Retail business is aware of the fact that increasing the state's supply of competitively priced electricity while building conservation efforts will take several years. Therefore, prudent action by public policy makers will avoid electric energy shortages. In the last few years, the Legislature has adopted new requirements on electric utilities that are likely to increase the price of electric power, making Minnesota less competitive.
- Lifting the ban on the construction of nuclear power plants and from power plants using superior fossil fueled technology.
- Passage of legislation that will encourage generation from many sources as long as the retail price is the lowest cost alternative that still ensures reliability.
- Policies that encourage cost-effective conservation by retail businesses including financial incentives to convert conventional power usage to more energy efficient technologies.
- The timely development of a transmission and electrical generation system that can meet the growing demands of customers.
- Policies that preserve existing generation by cost-effective improvements that extends a facility's usefulness.
General Sales Tax
MnRA has a long standing position of opposition to increasing the sales tax rate, or expanding the sales tax base to include clothing and services, unless the expansion is necessary to comply with the Streamlined Sales Tax Project. Such expansions would be harmful to retailers and break the covenant originally made by the state when the sales tax was initiated. The Streamlined Sales Tax project helps level the playing field and increase collections from remote sellers who currently have an unfair advantage over the "brick and mortar" retailers. The project is a cooperative effort by a number of states to encourage Congress to establish the ability of the states to tax internet sales.
June Accelerated Sales Taxes
MnRA has worked tirelessly to eliminate the June accelerated sales tax payment (JAST). This tax gimmick is left over from the fiscal crisis the state faced in the 1980s. JAST is an accounting nightmare for retailers and it does not provide a structural fix to budget problems while encouraging the state to deficit spend. MnRA successfully passed legislation in 2001 to reduce the percentage retailers must remit early and set a sunset date for its complete elimination. Unfortunately because of state cash flow issues, a 2010 law accelerates sales tax collection in every month. This new provision creates an accounting nightmare for businesses and simply passes on the state's cash flow problems to Minnesota retailers.
Local Sales Tax Options
MnRA has a long-standing position against local option sales taxes because of the patchwork tax system they create. With continuing transportation needs growing in the Twin Cities area, legislators have given metropolitan counties the authority to impose county-wide transportation tax which was added to the sales tax. This metropolitan area transportation tax authority continues to exasperate the patchwork of non-uniform taxing jurisdictions. Under current law certain conditions must be met before local option sales taxes can be approved. If local sales tax authority is granted, MnRA agrees that it must be approved in a general election. The tax levy must also be dedicated for a specific capital improvement project and have a mandatory sunset date. Furthermore, the community should be prohibited from seeking additional authority for at least one year after the tax has expired
Alternative Minimum Corporate Tax
The Alternative Minimum Corporate Tax (AMT) was initially created to reduce the use of tax preferences for certain high income levels. The Minnesota AMT nearly conforms to the federal tax system. One of the biggest differences is that the federal AMT allows the deduction of home mortgage interest and the Minnesota AMT does not. Also, the state AMT has one flat rate, whereas the federal AMT offers two rates. It is not uncommon for a Minnesota business to pay a small federal AMT but be taxed a larger amount by the state.
Single Sales Apportionment
Single sales tax apportionment remains an active public policy issue. The apportionment formula was accelerated in previous legislative sessions and will be based on 90 percent of sales in 2011. It will be phased in completely by 2014.
Great care is taken by pharmacies to guarantee that patients are supplied with a safe and adequate supply of pharmaceuticals. Pharmacy remains concerned about private and public sector drug re-importation efforts which pave the way for the use of unsafe, outdated or counterfeit drugs. Pharmacies in Minnesota that offer Medicaid services have been forced to take an additional 4 percent cut in reimbursement for single source drugs as a result of the First Data Medi-Span lawsuit. Although the Department of Human Services could have eliminated the reduction without legislation or any additional cost to the state, it chose not to. Due to the reduction in reimbursements, along with the impact of the wholesale provider tax, pharmacies have experienced significant losses. Government continues to examine additional regulation for over-the-counter (OTCs) products. Several years ago, products containing pseudoephedrine were placed behind the counter with strict limits on age limits for purchase and restrictions on frequency of purchase. These laws are often expensive to implement and cause great inconvenience to customers. Products containing Dextro-methorphan, a chemical used in cough suppressants is also being considered for additional restrictions such as behind the counter sales.
- The concept of in-store clinics.
- An increase in the state dispensing fee as recommended by the DHS Payment Advisory Commission.
- Allowing pharmacy members to have a corporate policy regarding pharmacists' right to refuse dispensing of drugs.
- Acceptable uniform standard for any proposed pedigree legislation.
- Reasonable standards for voluntary take back of pharmaceuticals and pharmaceutical waste including sharps.
- Full reimbursement to pharmacy of the 2 percent wholesale drug distribution tax.
- Cuts to pharmacy reimbursement for Medicaid patients.
- Unreasonable reductions to pharmacy for workers compensation reimbursement.
- Regulations to restrict access to over-the-counter drugs approved by the FDA.
- Proposals that deny reimbursement to pharmacy on co-pays under Medicaid.
- Changes to the average wholesale prices (AWP) in the Medicaid program.