Brandon Scholz: Don’t hit supermarkets with higher tax
January 20, 2016
Brandon Scholz, president and CEO of the Wisconsin Grocers Association, is well-aware of the benefits LIFO provides to his organization’s members and their communities. Take a look at his recent opinion piece published in the Wisconsin State Journal on January 19, 2016.
Keeping food on the shelves, fresh produce in the aisles and a stocked storeroom to replenish goods are obvious priorities for independent supermarket operators, but these business owners play a bigger role in their communities beyond providing food to eat.
From creating jobs to investing in the local economy and supporting charitable activities, grocery stores are a vital partner in every community. A lot goes in to operating a business that ensures its customers and communities are served with the highest quality, and when I’m out talking with grocers in Wisconsin, taxes are often top of the list.
A proposal floated in Washington, D.C., would repeal an accounting method that is heavily relied on by the supermarket operators. Because of the constant inventory fluctuations, the grocery industry is one of largest users of the “last in, first out” method of accounting, also known as LIFO.
LIFO is an essential tool that makes running a business more efficient and, in turn, more prosperous. The grocery industry isn’t alone in its utilization of this accounting method. Retailers, wholesalers, distributors, manufacturers and countless small businesses use LIFO to manage fluctuating inventory expenses and keep enough cash on hand to cover operating expenses.
Despite its key benefits for so many small businesses here in Wisconsin and across the country, the Obama administration and lawmakers in Congress want to ban this accounting method.
Eliminating LIFO would hurt those business owners who chose to employ the accounting method while only satisfying short-term federal government revenue goals. Businesses would be forced to pay an immediate retroactive tax increase.
If businesses are able to keep their doors open after paying this immediate painful retroactive tax, they would continue to see increased taxes. Ultimately, in the end, grocery shoppers in Wisconsin and across America would lose.
Repealing the LIFO method of inventory accounting would have lasting effects on a broad cross section of businesses. A proposal to repeal LIFO is a blow to the hardworking independent grocery store operator who works each day to ensure the shelves are stocked with healthy and safe food for their customers.
Wisconsin’s economy cannot sustain a ban on using LIFO. I urge the members of Wisconsin’s congressional delegation to oppose any suggestion of repeal.