Retail Lobby Is in the Market for a Bigger Hill Profile

Posted October 13, 2010 at 11:00pm

The National Retail Federation is launching a fresh attack Thursday on a potential new tax that the group fears the next Congress will consider to help reduce the federal budget deficit.

“We are obviously taking this extremely seriously,” said Matthew Shay, the NRF’s president and CEO. “This kind of conversation is a serious threat to the people we represent but most importantly to individual consumers.”

The retail lobby commissioned a study, which it will release Thursday, on the effects of a value-added, or consumption, tax. A VAT is charged at each stage of development for goods and services, and the study found it would cost 850,000 jobs in its first year and would bring a permanent drop in retail spending worth $2.5 trillion over its first 10 years. Shay added that middle-income people and those on fixed incomes would be hardest hit.

The firms Ernst & Young and Tax Policy Advisers prepared the report, titled “The Macroeconomic Effects of an Add-on Value Added Tax.”

The NRF will submit its study to President Barack Obama’s deficit reduction commission. The retail industry says the commission could likely include a VAT proposal in its recommendations to Congress that are expected by Dec. 1.

“The initial thrust of the effort is to make sure the deficit reduction commission … members and interested policymakers have the factual basis for their proposals to reduce the deficit,” Shay said.

The retail group also plans to step up its Congressional profile in the long term, he added.

“We’re going to raise the visibility of the retail industry,” said Shay, who joined the NRF in June. “We want to significantly increase the resources that we make available for advocacy issues.”