Retailers call for equal taxation on sales

  • Ted Hebert, owner of Teddy Bear Pools and Spas, speaks to a dozen members of the Senate Retail Task Force during a hearing at Union Station in Northampton on Monday. About 60 people attended the hearing to voice concerns on strengthening local retailers. Gazette Photo/Kevin Gutting

For The Recorder
Tuesday, February 06, 2018

Saying a state sales tax exemption for online sales is crippling their businesses, shop owners from throughout the Pioneer Valley urged a new retail task force Monday to tax every sale in the Bay State equally.

“Four or five times a day someone comes into my store with their phone, has the product they’re going to buy at the price, and I am immediately at a 6.25 percent disadvantage,” said Dave Ratner, longtime owner of the Dave’s Soda and Pet City chain stores, referring to the state sales tax. “I don’t understand why the state is not collecting sales tax. It’s a killer for retailers.”

Ratner joined about 50 small and large business owners at Union Station, where members of the Massachusetts Senate’s Retail Task Force held a public hearing on the challenges facing retail businesses.

In addition to the tax exception for online sales, other issues raised included proposals to raise the minimum wage and the increasing cost of health care.

The task force is holding hearings across the state. A full report of its findings and recommendations is to be presented to the Legislature by June.

The discussion featured 12 panel members, including Sen. Don Humason, R-Westfield, Judy Herrell of Herrell’s Ice Cream and Bakery in Northampton, and Sen. Michael Rodrigues, D-Westport, the chairman.

The task force was created by Sen. Stanley Rosenberg, D-Amherst, in September when he was Senate president. Rosenberg is not on the panel, but he did attend Monday’s meeting.

Over the course of 90 minutes, business owners presented their personal experiences and worries.

“This is the most challenging year that we have faced, and a lot of the challenges are from legislation that have been passed that are really unfriendly to small businesses, especially brick-and-mortar retailers,” said Ratner, who has owned Dave’s Soda and Pet City since 1975.

Another business owner, Joe Blumenthal of Downtown Sounds in Northampton, echoed Ratner’s sentiments about the advantages e-commerce has over local small retailers.

“The state needs to really pay attention to the fact that so much of retail has shifted from brick-and-mortar to online,” Blumenthal said. “On a $2,000 guitar I have an automatic $125 disadvantage when it comes to Amazon when I try and sell that.”

Others shared their concerns on proposals to increase the minimum wage, saying a $15-an-hour minimum by 2022 could seriously harm their labor costs and cause them to cut jobs. The minimum wage is currently $11 an hour.

Bob Luz, president of the Massachusetts Restaurant Association, said minimum wage increases in recent years — from $8 an hour in 2014 to $11 an hour last year — have kept some restaurant owners struggling to keep up with the amount they need to pay their employees.

“Paying money to those (tipped employees) who are already the highest-paid wage earners in the restaurant takes away the amount of money that an owner can spend on his or her true hourly employees that are looking for those wages,” Luz said.

He also said that rising health insurance costs and mandatory paid sick days for employees have put stress on restaurant owners, forcing them to increase food costs and make cuts to their staff.

“We have operators that are doing their best to offer insurance to their employees, but because the state can offer a better plan at less money and has marketed it, we are now being held responsible for the buying decision of an employee,” he said. “We need your help. Our industry is facing death by a thousand cuts. These are really the true impacts of what’s happening to restaurants on the Main Streets of Massachusetts.”

Ted Hebert of Teddy Bear Pools & Spas in Chicopee agreed that rising insurance costs are causing his profit margins to shrink. Hebert called for unification between the state and businesses to help rectify the issue.

“The bottom line is that it would be great if we worked together, as human beings,” Hebert said. “Otherwise, we’re not going to be in business.”

After the meeting, Humason said he was grateful for the response the task force received from the community at the public hearing. The messages sent by retailers about sales tax, minimum wage increases and rising health care costs have reverberated across the state, he said.

“I love the fact that the people of western Mass. were so well represented,” Humason said. “I’m happy with the message, because (it) has been consistent with messages at other listening stops. That’s a good thing because it’s not an outlier.”

Herrell said she hopes she can bring back to the Legislature a message seeking balance between business and the economy.

Humason said he is “cautiously optimistic” that the Legislature will listen to the findings of the task force when it submits its final report.

“Something’s got to be done because we really seem to stand on a precipice where a lot of retailers are at that brink. We don’t know if they’ll be here tomorrow, or next week, or next year — they may very well not be,” he said.

The retail task force will continue to set up public hearings across Massachusetts to discuss the state of retail economy. A final list of its recommendations will be sent to the Legislature by June.