Retail groups opposing proposed BAT import tax

WASHINGTON, D.C. (Feb. 3, 2017) — A coalition of 120-plus trade associations and businesses have joined together to lobby against the "border adjustment tax" (BAT) being considered by House Republicans, arguing that imposing such a tax will result in higher costs for U.S. consumers on everyday items including food, gas and clothing.

The coalition, Americans for Affordable Products (AAP), contends a BAT would end up costing American families as much as $1,700 a year in increased prices for retail goods.

Among those supporting the initiative are the Auto Care Association (ACA), Automotive Aftermarket Association Southeast Inc. (AAAS), AutoZone, Montana Tire Dealers Association (MTDA), National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA).

Under the BAT, U.S. companies would pay virtually no corporate taxes simply because they export products, the AAP said, while other American companies delivering affordable essentials to their consumers will be faced with "crushing" taxes simply because many of these essentials must be imported.

This means higher prices for everyday goods that Americans purchase, the AAP said, and taxpayer subsidies for products sold abroad. Middle class and low-income families, who have seen their wages stagnate in recent years, the coalition stated, would bear the brunt of this new tax because they spend a larger share of their income on tradeable goods that would be hit by the BAT.

According to the Tax Foundation, an independent tax policy research organization, a border adjustment would exempt U.S.-based companies from having to pay income taxes to the U.S. government on their income from goods exported.

At the same time, companies would be required to pay U.S. income taxes on the value of goods they import.

"The BAT is an immediate threat to economic viability of thousands of small, family-owned businesses in the auto care industry, "said ACA President and CEO Bill Hanvey.

"We have a complex supply chain throughout the country that distributes the right auto part to the right place at the right time, so that the American consumers can keep their vehicle on the road," he added.

"The effect of the BAT will rapidly be felt by the consumer, and will bring real, downward pressure on growth, planning and employment in the industry."

Noting that the retail industry "pays among the highest effective tax rates of all industries," RILA President Sandy Kennedy said the proposed "border adjustable tax is harmful, untested and would put American retail jobs at risk and force consumers to pay as much as 20 percent more for family essentials.

"We are committed to working with Congress to ensure they understand the impact of this proposal and to pursue tax reform that reduces rates and benefits consumers and retailers alike."

According to the NRF, Federal Reserve Bank of New York President and CEO William Dudley recently cautioned that that a border adjustment tax would have "unintended consequences" for American consumers.

"Mr. Dudley and retailers are in agreement: a border adjustment scheme would be a risky experiment for the American economy," NRF Senior Vice President for Government Relations David French said. "Economic theorists are playing with fire and it's the consumer who ultimately will lose."

"We are pleased to hear Mr. Dudley voice his support for corporate tax reform," Mr. French said. "The best way to grow our economy is for Congress to lower tax rates for all businesses, not pick winners and losers."

The Americans for Prosperity movement will be making the BAT plan a "Rubicon for congressional Republicans to cross at their own risk," according to AFP President Tim Phillips.

"There is a strong disagreement over border adjustment tax, which is really a tariff," he said in a call with POLITICO. "This is something we're going to fight tooth and nail."