This article was originally published in the “CAPITOL BUSINESS : The Business-Government Connection” section of the Sacramento Union on June 22nd, 1991.
Sometimes it’s hard for the average citizen to fully appreciate the demands placed upon local business by government regulations. If you have never run a commercial establishment, then you have probably never experienced it. However, it is more than true to say that excessive regulation and higher taxes are literally driving businesses out the Golden State.
Grocery stores may be one of the more interesting illustrations of intrusive regulation. For example, I hold in my hand a four page list of all signs which grocer’s are required to post in their stores within California (and this doesn’t include the variety of local city or county requirements).
We have equal opportunity signs. Job safety and health protection signs. “Polygraph Protection Act” signs. Saccharin notices. Discrimination in employment signs. Industrial welfare signs on wages, hours and working conditions. Minimum wage signs. Log and summary of occupational injury and illness signs. Access to medical and exposure record signs. Emergency phone number signs. Payday notices. Worker’ Compensation Carrier signs. Open and recycling center signs.
Signs regarding the unlawfulness to sell tobacco related products to minors. Warnings that alcoholic beverages can cause birth defects. Eating raw oysters may cause severe illness signs. Handicap signs for checkout lines. Employee signs regarding unemployment disability insurance. Warning signs that tobacco smoking is known to cause cancer. “Recycle your used oil here” signs. Recycling window decals stating the nearest recycling center and cross streets. And signs that say containers may be redeemed at a designated cash register, or designated location or with a designated person.
If I was a small grocer, I could run out of wall space, and this is only a partial list. I would not bother to share the list in such detail, except that it provides a graphic understanding of the degree of government regulation which we have begun to take for granted in our society.
Signs are just a symptom of even greater burdens which business has to bear. Sales tax administration is another major headache for grocers. It use to be simple – if you sold something edible, then you didn’t tax it. Now sales clerks have to make decisions regarding all sort of products as to whether they are taxable; if they’re wrong, the store has to pay the tax anyway. Bit by bit, some food became taxable and others not. First it was soft drinks and then beer. Now the clerk has to remember which bottles of water are taxed and which aren’t. And the new, proposed “snack taxes” will tremendously multiple the complexity.
The clerk is now a tax collector and mistakes are often made. According to Don Beaver, President of the California Grocers Association, it’s not uncommon for a Board of Equalization sales tax audit to place an extra $20,000 to $25,000 liability on a small grocery store for failing to tax everything properly. The grocer ends up subsidizing the tax rolls because the taxable exceptions are too confusing. Furthermore, due to all of the sales tax paperwork, it costs the average grocer 2.38 cents out of every dollar to pay for the privilege of being the tax collector. Costs which are reimbursed by some states, but not by California.
Surely electronic scanners at the check-out will help, but they cost over $10,000 per lane. With grocers having a 1-5% profit margin (depending on their volume), there isn’t a lot of room with which to play. Currently, three thousand grocery stores in California have scanners, but five times that amount (over 15,000) are left to wrestle with bureaucratic complexities of the tax system.
These types of regulatory burdens are slowly killing business. It is essential that policy makers come to appreciate the demands and trials of running a business, or we will continue to damage the economic engine of our state.
Bruce Lee expresses the views of the California Business League, a trade association dedicated to restoring quality government. His column appears Fridays in The Union. If you have comments or an item for the column, write Capitol Business, P.O. Box 60267, Sacramento, CA 95860.