ALEXANDRIA, Va.—Congress is looking to pass a $3.5 trillion reconciliation package and included in the package are proposed tax provisions that could potentially harm the convenience and fuel retailing industry—and NACS needs your help.
Yesterday, the House Ways & Means Committee approved its portion of reconciliation, which encompasses $2.2 trillion in tax increases. Ahead of the markup, NACS sent a letter to members of the Ways & Means Committee laying out its concerns with the proposed legislation.
Within the legislation is a provision to substantially increase the federal excise tax (FET) on tobacco and nicotine products. This language is from a bill that was introduced earlier this Congress, the Tobacco Tax Equity Act. As written, the legislation doubles the federal excise tax on cigarettes and applies tax parity to all other tobacco products. NACS opposes an increase of this magnitude because it will push current users to the illicit market where products are unregulated, and age isn’t verified, which undermines the responsible efforts of convenience retailers.
In the illicit market, sellers operate completely outside of the law offering unregulated products to users of all ages. This negates the health protections that Congress intended when it passed the Tobacco Control Act in 2009. The Food and Drug Administration is responsible for oversight of the manufacturing and sale of these products to protect consumers, but none of those protections help when illegal sales are made.
The convenience industry's tobacco retailers invest millions in in age verification and compliance to ensure convenience stores are in full compliance with federal, state and local laws. Additionally, the industry collects and remits the appropriate taxes.
NACS led a letter to House leadership and members of the Ways & Means Committee opposing the increase in the FET for these reasons. In addition to NACS, the letter was signed by the Energy Marketers of America, National Association of Truckstop Operators and the Society of Independent Gasoline Marketers of America.
Additionally, within the reconciliation package, NACS is concerned about the cumulative effect that the various tax increases will have on the convenience industry. Given that most convenience stores operate as pass-through entities, the proposed increase in the top individual rates constitutes a significant tax increase on small businesses. Moreover, the proposal caps the 199A deduction in such a way that it disadvantages small businesses against their corporate competitors.
NACS is urging its members to contact their members of Congress to tell them why now is not the time to pass potentially crippling tax increases while the U.S. economy continues to struggle to fully recover from the effects of the COVID-19 pandemic. NACS has launched two industry calls to action. Please take a few minutes to send pre-written messages opposing the FET increase and the egregious tax increases to Capitol Hill today.