ACMA Industry Alert: The Week in Tax & Postal - A Win & a Loss Industry Alert: This Week in Washington: One Win, One Loss, But No Outcomes...Yet Dear Catalog Industry Executive: Personally, I like to win. And it wasn't just a loss, it was a drubbing. But let's start with the good news as that was considerable too... Executive Summary: Rep. Bob Goodlatte (R-VA-6th) released principles he hopes will form the foundation of a House bill in response to the unworkable and unfair Senate-passed Marketplace Fairness Act (MFA). The principles clearly show that the MFA won’t pass muster with the House. What’s more, Chairman Goodlatte incorporated many elements from TruST’s true simplifications – so we consider this a real ‘win.’ The ‘loss’ came at the September 19th Senate Hearing on Postal Service ratemaking. Sen. Tom Coburn beat back hard on the impact of postal rate increases, downplaying the known fact that they lead to significant mail volume declines and said no solution would work without raising additional revenue generated from rate hikes. This could lead the USPS Board of Governors to vote to file an exigency postage increase next week. The Win: Goodlatte’s Principles a Huge Step in the Right Direction After months of work with the Chairman’s office by ACMA and its TruST partners, Mr. Goodlatte released his principles and stated that “I don’t believe the Senate bill meets these standards.” TruST has said we are happy to participate in a productive way to close the internet sales tax gap but not at the expense of grave injury to our businesses. Chairman Goodlatte’s principles indicate he understands and wants an effective solution. The principles are the culmination of months of work educating officials on the enormous costs MFA would have on catalog, internet, and other remote marketers. TruST, the coalition ACMA co-founded with three other industry groups, has created a scorecard showing the significant shortcomings of the Senate’s MFA in comparison to Goodlatte’s principles. This represents a victory for our efforts through TruST and for all remote marketers who stand to be buried under labyrinths of state tax schemes for little gain. TruST calculates MFA will add less than ½ percent in new tax receipts; it may actually be a net loss, should sales-corporate-personal revenues fall as companies fail. Fifteen months ago, Senate staffers told me “MFA was a done deal” and that catalogs better be prepared to start collecting taxes in 2013. Goodlatte’s release this week is the clearest sign yet that our message is getting through and that change must be done right. This week demonstrated we have stopped MFA from being fast-tracked into law, keeping remote marketers from the significant expense of implementing and maintaining a costly new burden and being subject to audits and liabilities from practically every state in the nation. Despite this real win, we still have a battle on our hands. Goodlatte needs to convince other House Judiciary Committee Members and ultimately, the full House. Next up, TruST will soon release a cost of implementation white paper that quantifies the expense and complexity of MFA, particularly from a software implementation and maintenance perspective. As you may know, MFA claims that so-called “free” software will solve everything. Be sure to read the white paper, written by two ACMA members, and you’ll see why it is anything but free. The Loss: Senate Postal Rate Hearing This week’s Senate hearing, “Outside the Box: Reforming and Renewing the Postal Service, Part I – Maintaining Services, Reducing Costs and Increasing Revenue Through Innovation and Modernization,” documented we are still at great risk on postal issues. Testifying for the Coalition for a 21st Century Postal Service (C21) and the Affordable Mail Alliance (AMA) – groups ACMA is very active in – the DMA’s SVP Government Affairs Jerry Cerasale was publicly grilled by Ranking Member Tom Coburn, (R-OK) during the Senate’s Homeland Security and Government Affairs Committee hearing this week. The beating was so bad that sitting in the audience, at times I felt I wanted to race to my colleague’s defense. Specifically, Coburn said he feels catalogs have been subsidized by other mailers and are driving half a billion dollars of losses at the USPS. When Cerasale challenged Coburn with the large drop in catalog volume since 2007, Coburn said he believed it was due to the recession and not the 23%-plus spike in postage. At that same hearing, the Postal Service’s Inspector General defended his Office’s study concluding mail remaining in the system is essentially inelastic. Combining these two “facts” leads Dr. Coburn to search for a legislative mechanism to force catalog postage costs substantially higher. Since we are sure to have an exigency hike absent postal reform, the threat of significant price increases for catalogs remains very real until reform is successfully signed into law. Catalogers must intensify efforts to inform legislators to move on postal legislation and that forcing up postal rates will only undermine the roughly $2 billion in overhead costs currently borne by catalog mail while undercutting the USPS’s rapid package volume growth. For more on the Senate hearing, please go to the ACMA home page where you’ll find further details, as well as links to nearly a dozen news reports. A Win, A Loss, So What’s Next? As with legislative developments on the tax front, now is the time for every cataloger to get active and make your needs known to Congress. ACMA is available to help any cataloger, member or not, engage with legislators and protect their interest. Look for another email soon detailing exactly how to do just that. Stay tuned… Sincerely, Hamilton Davison President & Executive Director American Catalog Mailers Association www.catalogmailers.org hdavison@catalogmailers.org ### About ACMA ACMA is a Washington-based not-for-profit organization specifically created to advocate for the unique collective interests of catalog mailers in regulatory, public and administrative matters where the shared impact transcends individual company interests. The only catalog owned and controlled trade group focused solely on the business interests of catalogers and their supply chain, ACMA participates in rulemaking and other proceedings of significance where a single collective voice increases influence and effectiveness. Membership is open to any party with direct interests in the catalog industry. More information can be found at www.catalogmailers.org. Published: 09/20/13

Unable to open remote file.