government affairs blog
On Dec. 15, 2014, Aaron Lowe, senior VP, regulatory and government affairs, Auto Care Association, posted a blog entitled “My New Year’s Resolutions for the 114th Congress.” In that blog, he called on Congress to move forward with some of the association’s key legislative and regulatory priorities. It appears now, just five months in, that Congress doesn’t want to disappoint our industry with its usual accomplishment paralysis and instead is taking steps to help us realize one of our hopes – reforming chemical regulation.
The Toxic Substance Control Act (TSCA) has been in place since 1976 without any major overhauls. This has created a problem for industries like auto care who cannot work within an antiquated chemical safety review system that doesn’t keep pace with innovation; but also for states that have grown tired of looking to the Environmental Protection Agency (EPA) for guidance on this issue and getting none. Years ago, those combined pressure points drove U.S. industries, including auto care, to call for a broad modernization of TSCA. Finally, in 2015, that may happen thanks to what may be an unprecedented effort of compromise and bipartisanship from Congress (and of course our association’s efforts).
In the Senate, S. 697, the “Frank R. Lautenberg Chemical Safety for the 21st Century Act” was introduced earlier in the year by Senators David Vitter, R-La., and Tom Udall, D-Utah. It quickly became the legislation that both industry and Senators would rally behind. Over the last few months, the bill had to endure the typical slog of compromises and amendments, but is now generally considered to strike a balance between EPA capabilities, the goals of TSCA modernization for industry, and State control over protecting their residents.
S. 697 was marked up in the Environment and Public Works Committee on April 28. While it does have 40 co-sponsors spanning the far right to the far left, Oregon to Oklahoma, it won’t go any further unless it has the 60 votes that is understood to be the quid-pro-quo to getting on the Senate floor for final consideration.
While the push for 60 marches on in the Senate, the House is also doing their part to make one of our resolutions come true. By the time you read this blog, the House Energy and Commerce Committee Subcommittee on Environment and the Economy will have marked-up their draft bill, the “TSCA Modernization Act of 2015.” The House’s approach is different from the Senate in that they chose to modify existing law with a scalpel, going after just a few sections of existing law, instead of a total overhaul. However, like the Senate, the strategy of bipartisanship and compromise is being utilized in the House to move the issue forward.
The House draft, however, does have one critical section for the auto care industry that the Senate bill does not – an exemption for replacement parts. According to the bill as proposed by the subcommittee, as long as those replacement parts were designed prior to a rule on a certain product and chemical risk being published in the Federal Register, and they do not “contribute significantly” to the risk the EPA has identified, they are exempted from new safety regulations. And the auto care industry can thank the Alliance for Automobile Manufacturers for securing that language in the bill.
The next steps in the House for our association will be both to ensure the replacement parts exemption remains in the bill after a full Energy and Commerce Committee mark-up and to get it to the floor for a full vote. The Committee has a fairly aggressive timeline, wanting to complete their part by June 14, which will put a vote on track for some time in July.
So, if the Senate passes S. 697 in July, and the House passes their draft in July, Congress may be able to say they accomplished more than just getting re-elected this year. They may actually pass real, transformative legislation that moves our auto care industry, as well as other industries, into an era of chemical safety regulations that more closely match the speed of our consumer product innovations.
While it’s not a done deal until the “fat lady sings,” the association is obviously pleased with the progress Congress has made on one of our New Year’s resolutions. However, there is four more that need action if Congress really wants to make us happy next New Year’s (hint, hint)!
With a little luck, we are reaching the end of the 113th Congress. By nearly every measure, this was the most unproductive sessions in U.S. history. In fact, it really is difficult to point to any major accomplishments from this Congress over the past two years. So, if you are a glass half empty type of person, Congress has a lot of major issues that need to be addressed next year. If you are a glass half full individual then the 114th Congress, with Republican majorities in both the House and Senate, will have nowhere to go but up (or at least that is what we hope).
So, in the holiday spirit and being the positive industry lobbyists that we are, let’s take a brief look at some of the issues that Congress could take up next year for the benefit of the U.S. economy and specifically the auto care industry.
Highway Trust Fund: There are not many people in Washington, or even around the Nation, that do not believe that the U.S. needs to come up with a dependable and adequate source of funding for transportation infrastructure. Currently, the highway trust fund is sustained by an 18.5 cent gas tax which has not been increased since 1983. Meanwhile, revenues from this tax have dwindled, due in part to the fact that today’s vehicles are more fuel efficient; while the list of transportation infrastructure needs has skyrocketed. When we can’t adequately move goods from one place to another efficiently, the entire economy suffers, including the auto care industry.
The current Highway Trust Fund authorization runs out in May, and coming up with a long term funding proposal has been stymied by political fear in Congress of raising taxes on motorists. So the question is: how does Congress find a politically acceptable way to come up with a long term solution that provides adequate funds for our transportation infrastructure? The answer probably lies somewhere between finding the political courage and coming up with a creative funding scheme. In any case, the time to act is now before U.S. infrastructure looks more like a third world country than one of the leading nations in the World.
Tax reform: Like the Highway Trust Fund, there is little disagreement that the current U.S. tax code is a mess. The extremely complicated and confusing code makes compliance difficult and expensive. Further, while the market distorting loopholes may be a boon to some, to most others, they are a burden; and oh yes, we have the highest 35 percent corporate top tax rate in the world. However, while reforming our arcane tax code may seem like a no brainer, the devil is in the details. What tax breaks could be canceled? Should reform be revenue neutral or increase revenue? And should reform be proposed for all taxes, or just corporate taxes.
Tax reform is definitely a difficult issue, but it appears that if there is anything that the new Republican majority and the President agree on, it is that reforming the tax code would make sense for the domestic and international economic benefit of U.S. businesses. In addition, there is some discussion that a long term funding source for highway infrastructure could be included in a reform measure, making this a win for everyone (ok, not everyone is going to like what comes out). So let’s see if the White House and Obama can come together to demonstrate that these warring factions can govern.
E-Fairness: How do you justify not charging state sales tax on Internet purchases when brick and mortar businesses must collect sales tax on every purchase? There are some conservatives that say that this is a new tax although it is still unclear to me how this is true since consumers are supposed to pay sales tax whether it is collected by the company or not. While it seems like the fair thing to do, passage of e-fairness legislation is not a slam dunk and we can expect the battle over this legislation to continue in the 114th Congress. However, with the strong support by the retail community, maybe Congress will finally do the right thing and level the playing field for collection of sales taxes.
Reform Chemical Regulation: Most businesses and environmentalists agree that the current system for approval and review of chemicals based on their impact on health and safety is antiquated and needs fixing. Modernization of the Toxic Substances Control Act (TSCA) which authorizes the Environmental Protection Agency (EPA) to oversee use of chemicals in products is a priority for both sides which makes it seem likely that a compromise bill could be worked out. So here is the rub, businesses want the changes to TSCA to preempt the many state laws that are popping up around the country to regulate the use of chemicals and environmentalists and state governments want state laws to continue to be in full effect, whether or not a federal law is passed.
Ok, so I understand the perception that many of these state laws, particularly the one in California are more stringent then what EPA might do, and I also understand that states regulators hate to cede power, but products containing chemicals are sold nationwide and not only in one state. Therefore, attempting to regulate state- by- state makes little sense either economically or from a regulatory point of view. This needs to be a national rule so that companies are able produce and distribute products containing chemicals around the Nation. While that standard needs to protect human health, it also should continue to permit companies to provide consumers with innovative and effective products. So here’s hoping that we can obtain some logic in the upcoming discussions on TSCA reform and that this issue can be worked out so that an effective national program for protecting the health and welfare of U.S. consumers can finally be enacted.
Trade Promotion Authority: There are two major trade agreements currently being negotiated: one in Europe through the Transatlantic Trade and Investment Partnership (TTIP) and one in Asia through the Trans Pacific Partnership (TPP). Both these agreements have the potential to increase export opportunities for U.S. auto care companies.
However, for these negotiations to ultimately result in agreements, Congress needs to provide trade promotion authority (TPA) such that any treaty will receive an up or down vote in the Senate rather than subject to amendment which would prevent any trade related treaty to move forward. TPA is important for our economy and for our industry and the time has come for Congress to act.
So that is some of my hopes for the New Year. While we wait for the 114th Congress to take their seats in January, I hope everyone has a great holiday season!
A major earthquake hit the House of Representatives last week when House Majority Leader, Rep. Eric Cantor, R-Va. lost his primary to Dave Bratt a Tea Party challenger. Rep. Cantor has decided to resign his leadership position at the end of July, so now the House will be holding an election to replace him. Right now Kevin McCarthy, a Republican from Bakersfield, who is the current House Majority Whip, is the favorite to take his spot. Of course, nothing is that easy anymore in Congress as Idaho Rep. Raul Labrador, R-Idaho, a tea party candidate, late last week threw his hat into the ring for consideration. While it is unlikely that Rep. Labrador can defeat the establishment candidate, McCarthy, the vote is symbolic of the problems burdening the House Republicans in running the House of Representatives where a move cannot be made without creating division in the party between establishment and tea party legislators.
Probably what is most troubling about the Cantor defeat is that it was almost totally unexpected. Like many things, not knowing why the primary defeat of Rep. Cantor occurred is creating more concern than the actual event itself. Polls showed Cantor with a major lead over Bratt, and Cantor was viewed by many in the party as the successor to Boehner should he step down from his speaker post. Everybody in Washington is attempting to analyze whether the defeat was because Cantor had upset his constituents or whether the tea party is more powerful than it appeared. Making matters more unclear, the tea party had very few victories to point to in primaries where they had targeted establishment Republicans. One other exception is the Senate battle in Mississippi, where Senator Thad Cochran (R) is in a difficult fight with Chris McDaniel for the Republican nomination.
While determining why a well-respected establishment Republican lost is important to the party, the leaders of the party now must do what they were elected to do -- which is lead. While attention is quickly turning to the upcoming mid-term election, there still are some critical issues on the table in House that need to be addressed before Congress adjourns for the year, including appropriations measures and a funding source for the highway trust fund. Other issues such as extending expired tax breaks might not be “do or die,” but they are critical to many U.S. small businesses.
The loss by Rep. Cantor in the primary could move House Republicans in one of two directions. It could help coalesce the party, bringing together its central core to support solutions to issues that are pending for the 113th Congress; or alternatively, it could make leaders in the party more afraid to take positions that could anger its more conservative membership. Establishing a path forward after the Cantor primary is clearly going to take some courage. However, sometimes in the worst circumstances, an opportunity arises that might not have been there before. Everybody in Washington is watching to see what House leaders are going to do, take on the opposition or regroup. The results have implications not only in the present, but the long-term governing of the House.
Welcome to the new edition of the Capital Report, now the Auto Care Association Capital Report. While the look of the report has changed (we hope for the better), we aim to continue to bring you all of the news relevant to the auto care industry from both Washington, D.C. and state capitals around the country. Let us know if you like our new format, or if you have any suggestions on we can improve this publication.
As I said a few months ago when the new name change was announced, the government affairs department is excited about the new rebranding effort, which we hope will better define our industry for lawmakers and regulators. In fact, the newly-named Auto Care Association was the subject of full page ads in Roll Call newspaper, one of the most read periodicals on Capitol Hill. The ads seek to show how our industry is important to consumers by ensuring their mobility.
Highlighting for legislators the connection between the auto care industry and consumers is important, because few in Washington understand how important the auto care industry is to the ability of Americans attempting to get from point A to point B, whether that is home to school, home to work or home to the grocery store. In fact, each trip is made possible because hundreds of thousands of shops, employing highly trained technicians, along with many more do-it-yourselfers work to ensure that the vehicle can make the trip safety and efficiently.
In reality, while our name has changed, the industry has not. Shops, using affordable quality parts, continue to provide repair and maintenance to car owners, often able to have the car back on the road the same day. Americans have come to expect this type of service from independents, but likely never think about how this happens or appreciate the effort that is required to help make it happen. Our hope is that the new name and the messages behind it will raise their awareness and therefore ensure that they will take it to heart as they consider legislation that could either help or hurt the auto care industry.
So as you view the new Capital Report and see our new logo, we hope you will join us in promoting the new name and the story behind it, both to your customers and hopefully to elected officials and regulators as well. There is no doubt it is going to take a village to make this happen. Let us know if we can provide any help along the way.
This is the final blog for 2013, and what a year it has been in the nation’s capital. The federal government was shut down for a couple of weeks, the government came close to defaulting on its debt payments, and the rollout of one of the most important government programs in decades was a total failure, as millions failed to be able to access government websites to purchase health insurance. And that was just during the fall of this year! What lies ahead for 2014?
A glimmer of hope this December was the passage last week by the House, despite strong opposition from some tea party legislators, of a modest two-year budget deal that was the bi-partisan work product of Senator Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis. The Senate vote is still not a sure thing, but as of this morning Senate leaders were optimistic that it will get done. No, this deal is not going to cure our nation’s bulging deficits, but hopefully it will keep the government funding issue out of crisis mode for a little while anyway.
My optimist side hopes that legislators will take the cooperation on the budget and decide to work together to attempt to take on some of the nation’s top issues such as entitlement reform, a long-term transportation infrastructure funding bill, and tax reform that levels the playing field for all businesses. The realist side of me knows that passage of most of these goals is not likely with a congressional election coming down the road. What is more likely is a more limited agenda where legislators seek to avoid negative publicity of a government shutdown, but avoid taking on issues or supporting compromises that might anger their political base. Thus we “kick the can down the road,” hoping that a future Congress will take on the difficult problems.
Unfortunately, in our current political system, “compromise” has become a dirty word as legislators up for election are fearful that supporting anything that does not stand up for conservative or liberal values will mean a primary challenge from someone further to the left or right. While standing up for your values is always an enviable trait, without practical compromises, no legislation ever moves forward. It seems that the only way that this trend will be broken is if voters and the business community support candidates that reflect the political tendencies of their constituents, but that also want to come to Washington to get things done. Unfortunately, with all of the hand wringing in Washington about the do-nothing Congress, it is hard to know whether the voters have had enough or whether we will see the parties further cement themselves in their positions over the next several years.
So my holiday wish is that legislators come back from their holiday break anxious to take on some of the big issues facing U.S. businesses and citizens by working with each other to find agreements that might not be perfect, but that moves the ball forward. Short of that, I guess I will just settle for peace on Earth… not sure which one may be more achievable.
Happy holidays to all AAIA members and their families from your government affairs staff. Here’s to a happy and healthy and productive New Year!
The recent government shutdown gave heavy-hitting trade association executives, along with former and current politicians, the opportunity to publicly admonish the current state of national politics, but some key government officials and industry groups took the time to shine the spotlight on what many in Washington, D.C. see as the next crucial step for Congress to take, properly funding the national transportation program.
On Oct. 21, Governor Bill Graves, now president of the American Trucking Association (ATA), told members at their annual meeting that recent political blockages were, “foolish, ill-advised, reckless and detrimental,” adding in a separate interview that, “our number-one issue is getting a package of infrastructure investment." Data shows that trucks carried 39 percent of all U.S. freight ton mileage, giving the ATA strong reasons for wanting a robust transportation program.
In 2012, Congress passed a national transportation bill that only funded the highway programs through fiscal year 2014. While that bill kept the U.S. Department of Transportation from shutting down entirely, the secretary at the time, Ray LaHood, recently called that bill “chintzy” and added, “The business community is fed up with the inaction of Congress when it comes to infrastructure. The business community knows that America has fallen way, way behind. There's a long, long list of bridges that need to be replaced or repaired. There's a long, long list of roads that need to be fixed up."
Chairman Bill Shuster, R-Pa., head of the House Transportation and Infrastructure Committee that will craft most of the next national infrastructure bill, is aware of the need for more and stable funding, but is also not blind to the political gauntlet he must face with such polarizing viewpoints present in Congress. Speaking on recent passage of the Water Resources Reform and Development Act of 2013, Shuster commented on the next transportation bill, stating, “It’s going to be tougher than this bill, but we’ve got to figure out how to move forward on that.”
There are several forces working against a smooth process for a transportation authorization bill. First, the vast divide that exists between the ideologies of Republicans and Democrats in present day Washington, D.C. keeps most members of Congress from being able to coalesce around a common breakfast order, let alone a package of varied funding solutions that needs to generate an estimated $550 billion per year to cover what experts say are our real infrastructure needs.
Second, it is no secret that there is a break in the Republican Party. The economic downturn created massive changes in Congress through stunning election results and the introduction of Tea Party-backed legislators. This puts Chairman Shuster in the position of needing to convince anti-spending conservatives within his own party that infrastructure is the one thing on which they need to find a way to spend money.
Third, the Senate is controlled by the Democrats and the House by the Republicans. This means having to merge two bills together in a conference that will more-than-likely approach transportation funding solutions using similar concepts, but having critical implementation differences. These differences could turn out to be non-starter negotiation points for either side. Several examples of these bipartisan congressional working groups coming together only to fail have come out of the recent budget and sequestration battles.
Fourth, no one from either political party in either chamber of Congress is willing to publicly say they support raising the federal gas tax. Everyone knows it needs to be done, but no one wants to be the elected official that raised taxes on struggling Americans and U.S. businesses in a still down economy. And who can blame them? Further, there are other issues to be piled on top of just these four so the pressures on legislators to work through these impediments are immense.
As the debate heats up in 2014, aftermarket businesses should stay connected to what is being said as far as transportation is concerned. Most members of Congress have not decided on what they believe is a final funding solution for repairing the nation’s crumbling infrastructure and therefore are open to hearing the views of key stakeholders and their constituents on the subject. Stay tuned to the Capital Report and other AAIA publications to follow this important issue.
There is a surreal feeling in the nation’s capital this week as Congress decided last week to shut the federal government down due to the continued strong opposition to the Affordable Care Act (ACA). The newspapers and television news are focused on the closing of many of our tourist sites and national parks; and of course, the furlough of many federal workers. For many of my neighbors, it was a day off to enjoy the great fall weather we are experiencing in Washington, although most federal employees I talked to found the entire situation frustrating. For AAIA, the traffic was a little lighter for the staff (although not as light as we thought it would be), and we acknowledged the fact that meetings and phone calls with federal officials were not going to occur any time soon.
The truth is that short term, the shutdown of the federal government is not going to be the end of the world. If a Continuing Resolution is enacted soon, life will be back to “normal” here relatively quickly. The problem is that there appears to be no end in sight to the funding issue and the long-term impact on the economy of a closing could be huge. While initially the furloughing of the nearly 800,000 federal workers (less now with the Department of Defense calling back a large number of its workers late last week) and the closing of offices, parks and museums may cost the U.S. about $300 million a day in lost economic output, according to IHS Inc., a market research firm, that cost will multiply over time as consumers and businesses defer spending. IHS further estimates that predicted 2.2 percent annualized growth in the fourth quarter will be reduced to .2 percentage point in a weeklong shutdown. Further, although the last shutdown in 1995 did not have a huge negative impact on the economy, our current economy is not even close to being as solid as it was back then, making us more vulnerable to the economic costs of the shutdown.
As bad as a shutdown is for the economy, failure to raise the debt ceiling before the Treasury runs out of borrowing authority could be much worse. While no one really knows the full impact of the federal government defaulting on its loan obligations, the last time we almost got there in 2011 was a disaster for the stock market. The Dow Jones Industrial Average dropped more than 700 points in the month preceding the approval by Congress of a bill to increase the debt ceiling. Such a drop right now, not only could wipe out the tepid recovery, but possibly send us into another recession or worse.
AAIA has joined most of the major business groups in Washington, including the U.S. Chamber and the National Association of Manufacturers, in calling for Congress to resolve the current budget crisis. We strongly believe that efforts need to be made to bring the budget deficits under control and it is important to address problems with ACA; but that it is critical that such action be done in a responsible manner, which means not shutting down the federal government and certainly not preventing an increase in the debt ceiling.
Clearly, the nation faces some major fiscal issues that need to be addressed. However, if the economy goes into another tailspin as a result of efforts attempting to solve those issues, than we will have new and bigger issues to contend with. Our leaders in Washington need to look at the bigger picture and find a way to resolve their differences. Our members and their customers’ economic future are clearly on the line if they don’t.
As we approach the August congressional recess, the attention of many Capitol Hill denizens is focused on tax reform. Much is at stake here as our congressional leaders have reached out to the public (businesses) at an unprecedented level, seeking real input, which in and of itself is a rare occurrence in Washington. Leadership in the Senate Finance and House Ways and Means Committees has made no secret of their desire to accomplish this task. This alone is significant, as most insiders agree that the opportunity appears to come along about once a generation. This possibility is given even more weight by the announced retirement of current Finance Chair, Senator Baucus, D-Mont., at the end of his term. Senator Baucus would clearly like tax reform to be one of his legacies once he leaves office next year.
Back in May of this year, the Congressional Research Service (CRS) released a report detailing current proposals in Congress, which at the time varied from the abolishment of most of the federal tax code and the adoption of a 23 percent national retail sales tax (H.R. 25/S. 122), to a flat tax where an individual is taxed on wages and businesses are taxed on cash flow (H.R. 1040). The report went on to detail the options available to Congress, and in its conclusion, outlined the challenges they will face in the process. It is here in this struggle within the Congress that as an association, we must stay focused on the possible outcomes that will have such far-reaching consequences for AAIA-member businesses.
Perhaps the most important aspect of tax reform for AAIA members is that it should be neutral among different types of businesses, so that businesses are not favored based on their form of legal entity (e.g., C-corp. vs. S-Corp. or pass-through). This goal was brought home several weeks ago when the small business lobbying community learned that the relevant committees were being heavily lobbied to bring down tax rates for C-corporations at the expense of all other businesses.
Convincingly, the CRS in the same report aptly described what is needed at this time - a tax policy [that] considers equity (or fairness), efficiency, and simplicity. Equity examines the distribution of the tax burden across different groups. This information can then be used to assess the “fairness” of the tax system. A tax system that is economically efficient generally provides neutral treatment, minimizing economic distortions and maximizing output. A tax system that is simple reduces administrative and compliance costs while also promoting transparency.
AAIA is committed to the establishment of a neutral tax system and to that effect, has decided to take an active role on the Steering Committee of the newly-formed Coalition for Fair Effective Tax Rates. The coalition currently consists of around 100 members, including the Retail Leaders Association, the National Federation of Independent Business and the National Association of Wholesalers-Distributors. Announced on July 23, the mission of the coalition is to educate Congress and key stakeholders that tax reform should be viewed through the lens of effective tax rates, the amount of taxes businesses actually pay. The hope is that effective-tax-rate comparisons will bolster legislation that broadens the tax base, while lowering rates for corporations as well as pass-through businesses.
The earlier-referenced “congressional leaders” are encouragingly bi-partisan at the committee level. Just last Tuesday, in response to President Obama’s own tax reform speech in Chattanooga, Chairman Camp, R-Mich. and Chairman Baucus released a joint statement stating, "We welcome the president’s recognition that our broken, outdated tax code is making it harder for U.S. companies to compete and American families to get ahead. Making the tax code simpler and fairer by closing loopholes and lowering rates for families and employers of all sizes will strengthen our economy, while creating more jobs and higher wages.” We couldn’t agree more, and we will continue our efforts through the coalition as the real work, defending against those who are fighting to protect the loopholes and special interests, is just beginning.
I am always asked, “How bad are things in Washington?” It’s a relevant question, considering the number of scandals emerging from the White House and the acrimony between Democrats and Republicans in Congress. If you read the papers or watch the 24-hour news channels (not recommended for those with high blood pressure), the image of a city that is in constant gridlock emerges and there appears to be nothing on the horizon that will change the situation, at least anytime soon.
In my opinion, the image is largely accurate. However, in the middle of the mess we call our nation’s capital, over the last couple of weeks, there have been a few glimmers of hope that elected officials are in small ways breaking the gridlock.
The first major development was the passage by the Senate Judiciary Committee of immigration reform legislation. Controversial, yes, but the passage was the result of a bi-partisan team of senators that worked a bill through a committee mark-up session (that is the process when a bill is debated and amended before passage) that was fraught with peril. The senators worked together to accept amendments that should help when the bill is considered in the full Senate, but no changes were accepted that would have killed its main intent which is to provide a path to citizenship for illegal aliens. Whether we agree or disagree with the goal of the bill, it was clearly a case where both sides worked together to achieve a result.
The second development was the joint introduction by Senators David Vitter, R-La., and Frank Lautenberg, D-N.J., along with eight Republicans and eight Democrats, of legislation to modernize how chemicals are reviewed and approved by the Environmental Protection Agency. Both sides of this issue agreed that the current system of regulating use of toxic chemicals is unworkable, but up until last week, there was no agreement as to how to correct the problems. In fact, Senator Lautenberg had introduced legislation that was strongly opposed by business groups and which was considered dead on arrival in the Senate. However, his willingness to compromise with Republicans on key issues involving how chemicals are reviewed by the Environmental Protection Agency and state preemption now provides new hope that this issue could move forward.
Of course, both these bills face very difficult prospects for enactment. The immigration reform bill will certainly face a difficult battle ahead and it is unclear whether a bill can pass without support from many conservatives that are strongly opposed to immigration reform.
While the Toxic Substances Control Act (TSCA) agreement has been widely praised by many, some environmental groups have indicated that they do not think that the compromise provides adequate protections for human health and there will be significant attempts to amend the bill as it moves through Congress. Like immigration, it will be up to the sponsors to carefully guide the bill through what will be a difficult debate in the Senate, while at the same time ensuring that the main goal of the bill is preserved. Additionally, it is unclear how the recent passing of Senator Lautenberg will impact the prospects for the legislation since he had been the champion for TSCA reform in the Senate over the past several sessions and it is unclear who will take on his leadership role.
So, a long way to go in both instances, but in Washington progress is often measured by inches and not miles. It’s only after baby steps are taken that we look back and see how big the small steps really turned into, or not. Further, there are major issues that the Congress will need to address, including a long term solution to our growing deficit, where no solution appears in sight. They require huge amounts of compromise from both sides and at this point no one appears ready to give in. In any case, it will be worth watching these two pieces of legislation as they are debated for any signs that the body is finding a way to legislate; or whether political considerations will doom this Congress to more gridlock in the months to come.
The Senate returned from its one week recess on Monday, May 6, and in their first major action, overwhelmingly passed (69-27) the Marketplace Fairness Act (S. 743). As you may have already heard, this bill will permit states to collect sales and use taxes on Internet sales into a state from vendors that do not have a brick and mortar location in that state. Proponents of the legislation were the nation’s major retailers, who claimed that the present system was unfair by forcing them to charge state sales tax on purchases of their products in the stores while Internet companies could sell the same products tax free. Also supporting the bill were the state governors that claimed, according to the National Conference of State Legislators, that they are losing about $23 billion in revenue due to the fact that they cannot collect the tax from the vendor. This is a no-brainer for states that are desperate for revenue. In Maryland, where AAIA is located, the state legislature passed legislation that will place a 1 percent sales tax on gasoline in July 2013, with a 5 percent increase in the tax taking place in 2016 should Congress not enact the Marketplace Fairness bill.
Many argue that Congress, through passage of this bill, is creating a new tax, but it seems to me that this is more of a case of fairness between brick and mortar and Internet sales. Both are competing for the same customer dollars for the same products, only one can charge significantly less -- about 6-10 percent less -- depending on the size of the sales tax. Further, it should be noted that many states require that the purchaser of the product pay the sales tax if it is not collected by the vendor, but of course that never happens.
The one argument raised by the opposition that does appear to me to have merit, is that the new legislation will place a major burden on small businesses operating over the Internet that will need to both collect the tax from customers in multiple locations and then pay each state the appropriate sales tax. The bill seeks to address this issue by exempting companies with less than $1 million in online sales across the US in a calendar year. The bill further requires states to provide remote retailers with free software to calculate taxes, file returns and communicate with the tax collection entity in each state. Further remote retailers will only have to report and file returns one time. While these provisions will help, Congress should probably look at this issue closely to ensure that small businesses will not be overly saddled with compliance burdens. However, it should be noted that the small business aspect works both ways since many brick and mortar small businesses are placed at an extensive competitive disadvantage when their Internet competitors do not need to collect sales tax from customers.
While the strong vote in the Senate provides some momentum for this measure, the House will be a tougher road since many conservatives have made this into a no new taxes issue. Further, Speaker of the House John Boehner, R-Ohio, recently announced that he will oppose the measure. So, if you support the ability of states to collect sales tax on Internet sales, you need to make your feelings heard by your representative. Clearly, while this legislation stands the best chance in years for obtaining enactment, it is going to take a strong push from the business community to make it happen.
There are thousands of trade associations in the U.S., just like AAIA, that represent the legislative and regulatory interests of their industry in Washington and in the states. Each industry has a specific point of view on a government initiative. And just like the AAIA government affairs department, the trade association lobbyists bring that point of view to the attention of the regulators and legislators in hopes that they can enact, defeat or shape a piece of legislation or regulation.
Notwithstanding these different points of view on many issues, there are instances where the business community is on the same side on a piece of legislation. Issues such as taxes, healthcare reform and labor laws often impact a broad segment of the general business community that are not defined by a single industry group. In these cases, trade groups pool their resources and act as coalitions, providing a stronger voice to legislators and regulators on key issues impacting the business community. Sometimes these coalitions are coordinated by broader business associations such as the U.S. Chamber of Commerce, National Association of Manufacturers (NAM), National Association of Wholesaler-Distributors (NAW) or the National Federation of Independent Businesses (NFIB). Other times, the coalitions are coordinated by one association or a group of associations that have the resources and interest in an issue to spearhead an effort.
AAIA is a member of numerous coalitions addressing issues related to healthcare reform, repeal of the estate tax, reform of the Toxic Substances Control Act (TSCA), and the efforts by labor unions to strengthen their ability to unionize workplaces. By working with these coalitions, we are able to fortify our lobbying work in these areas, while maximizing association resources to work on issues that have a unique impact on the independent aftermarket. AAIA is also a member of the Chamber, NAM, NFIB and the National Association of Wholesalers-Distributors, which provide us with additional resources and political capital.
In short, when companies decide to join AAIA, they receive not only the work of five lobbying professionals that work directly for AAIA, but also a broad network of hundreds of lobbyists and other government affairs professionals that work in tandem with AAIA on business-related issues that could potentially have a significant impact on our members’ bottom line. These coalitions have helped defeat legislative initiatives such as card check which would have made significantly easier for a labor union to unionize virtually any business, helped effectively rollback the estate tax such that most AAIA members are not impacted and prevented passage of ineffective and outdated TSCA reform bills that might have saddled aftermarket companies with significant and unnecessary compliance costs.
Now that is getting more bang for the buck.
While schools around the country are in the midst of spring break, Congress will be taking its version of spring break, leaving the nation’s capital for a two-week recess. No doubt, the press will call this a vacation and the usual accusations that Congress is taking too much time off will be moving through the air waves, newspapers and of course social media. Clearly, Congress does appear to take a lot of time off. The House takes a minimum of one week off every month to spend in their districts. Legislators also leave Washington for a week during major holidays like Presidents’ Day, Memorial Day and July 4th -- and let’s not forget the month-long break in August.
Is it a vacation? Many legislators will spend at least some of the next two weeks on vacations with their families. Others will go on “fact finding” trips that are intended to help them do their job better. Some of these trips often are to war zones like Afghanistan where they can obtain first-hand knowledge of how the war is progressing. You also will find some legislators in the district, meeting with constituents, holding town hall events or meeting with local officials on issues close to home. Many, if not all, legislators, also will focus on their re-election campaign, whether it’s planning the next campaign or raising money. Legislators, especially Congressmen, are under such incredible pressure to raise money that they are almost always in campaign mode.
There is definitely a debate in Washington and around the country as to whether legislators should be spending more or less time in the Capitol attempting to resolve some the nation’s major budget issues rather than back home. However, I think the real debate is not how much time they are spending in Washington, but really how are they spending that time. I’m not going to delve into that debate.
The reality is that legislators are home and, like it or not, this fact does present some opportunities for people employed in the aftermarket to get some “face time” with their elected official. Elected officials are often more accessible and are less hassled when they are home, out of the constant time crunch they face in the Capitol. There is no need for an agenda in these face- to-face meetings, just a chance to let them know that you either live or work in their district and that you cared enough to let them know it. If you are holding a Car Care Event as part of April’s National Car Care Month, invite them to attend. They may not come, but at least they will be aware of it.
Getting face time with your legislator can have a big pay-off should something come up in Congress and you need their vote. Also, legislators can help constituents navigate tricky federal regulatory issues that might arise and that might have a negative impact on your company. It’s not to say that they would get you out of trouble if you don’t pay your taxes, but they can provide assistance and can get the attention of federal agencies when you need it. Another great way to get involved is to attend one of their in-district fundraisers where you will definitely get spend some quality time with your Congressman.
So you can complain about all of the time Congress spends on vacation, or you can use it to your advantage. That is your choice. Oh, and before I forget, please let us know that you have been contacted with your legislator. That information can be invaluable to us if we need to contact your elected official regarding an issue impacting the industry.
Thanks and I hope everyone has a great National Car Care Month!