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Four months ago, Californians were hit with the biggest tax increase in our state's history – more than $12 billion in new taxes on everything from income and sales to vehicle license fees. Since then, tax proponents have proposed 31 new taxes that they predict will generate more than $40 billion in the first year. On top of that, some legislators have singled out oil and tobacco products for massive new tax hikes. These are taxes that the people will pay, not just the corporations.
The Neighborhood Market Association represents more than 1,800 independent grocers and small businesses in California who have been and will be hit by many of these taxes, particularly tobacco taxes. Tobacco products, popular or not, are a key part of our business. These products draw customers to our stores and result in the sale of a variety of other goods. They drive sales, which ultimately leads to more sales tax revenue being collected for our state, and enable store owners to provide more jobs in their communities.
Charging a premium for tobacco products will also result in increased theft. One member of our association, who owns a convenience store in El Cajon, recently reported that more than $10,000 worth of cigarettes were stolen from his store by his employees. Not coincidentally, this occurred in the weeks following the imposition of a federal excise tax increase on tobacco products. An additional tax increase by the state will further encourage this type of crime.
The well-being of our businesses should matter to the community because, collectively, our members employ more than 21,000 people and generate more than $3.6 billion of gross revenue annually.
It's time tax proponents in the Legislature heard from California's retailers. In this economy, many retailers have folded, and others are fast approaching their breaking point. Asking retailers to absorb the impact of more tax increases is a perilous proposition. New taxes have the clear potential to drive down retail sales, further eliminate retail jobs and heighten our state's budget crisis.
“I have been forced to lay off 37 percent of my work force, including an employee who has been with me since 1981,” said Amir Oram, of the Market Place in City Heights. “No doubt about it, the economy is bad, but tax increases and the added cost of doing business are what worry me.”
Yes, our state faces an unprecedented budget crisis. But there is arguably no better way to grow revenue than through a robust economy – not through tax increases that could force weakened retailers to their breaking point and eliminate more jobs and businesses.
In the last election, voters made it clear that the tax-and-spend model is not the answer to California's budget crisis. In fact, our members have been clear that we need a break from higher taxes after what we've all been through the last few months.
“Our 2,000 small business owners and their 21,000 employees are depending on our wonderful public servants in Sacramento to do the right thing and not raise any more taxes in this terrible economic environment,” said Mark Arabo, President and CEO of the Neighborhood Market Association. “Raising taxes will only put more small businesses out of business and put more workers on the unemployment line. There is a solution for this complex situation, and making it more difficult for small businesses to survive is not it.”
“Business as usual” tax increases – under the present circumstances – could very well put us out of business. The answer to this state's budget woes must be found elsewhere – in systemic changes that reduce expenses and eliminate waste, inefficiency and fraud.
Dabish is vice president of government relations and community outreach for the Neighborhood Market Association, based in La Mesa, which represents store owners in California, Nevada and Arizona.
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Self Proclaimed Genius
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