“Cost of doing business” laws a matter of convenience


March 26, 2015 3:24PM

In a state with a Republican governor and supermajority GOP control of both houses, tax increases are not often batted around in Tennessee these days. But that doesn’t mean taxpayers can take their hands off their wallets in complacency. They have to watch out for an innocuous sounding thing called a “cost of doing business” increase.

While not technically a tax hike in the traditional sense, these forced price increases have the same effect on the consumer. Look at SB199-HB225 for one such example. Under the bill, retailers selling cigarettes must raise the price of smokes substantially. Current law mandates that the retailers charge no less than what they paid for the pack of cigarettes plus an eight percent markup. The bill in question drastically increases that markup to 15 percent. Thus, the “cost of doing business” goes up, and so too does the price paid by the consumer.

This government-imposed price hike amounts to a hidden tax increase, but it’s actually worse than that. At least with a tax increase, that money is returned to the taxpayer in the form of government services. Here, the retailer gets to pocket it all. So the government is effectively reaching its hands into the consumer’s pocket, taking out extra money, and handing it to the retailer. The retailer can throw up his arms and say, “Sorry, Mr. Consumer, I have to make a higher profit off you. It’s the law.” Those who don’t smoke might not care about this sleight of hand. But it does impact them nonetheless.

These “cost of doing business” tricks apply to all kinds of goods we buy, even milk. Yes, milk. What you think is a voluntary transaction between you and your grocery store for that jug of white stuff involves the government secretly stealing more money from you and handing it over to that retailer. And who lobbies for these “cost of doing business” laws? None other than large retailers and convenience stores, so they can benefit at your expense. How “convenient” for them. This collusion between big business and big government is pure cronyism.

If the government wants to tax consumers for their purchases, it should do it in the light of day. And if retailers want to make more money off you, they better hope you’re willing to pay up. They shouldn’t be able to get your government to do it for them.

-Justin Owen