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Maryland's Gov. Signs Tax Law Change Tripling Bulk Product Exemption

Posted On: 7/4/2006

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ANNAPOLIS, MD -- Last month, Maryland's Governor Michael Ehrlich signed legislation, House Bill 951, that will raise the sales tax exemption on bulk vending purchases to 75¢. Set to take effect July 1, the bill, which represents the highest sales tax exemption for bulk vending in the nation, was the culmination of several months of hard work by Cardinal Distributing's Tom Paszkiewicz and Don Goletz of  Vendomatic (Frederick, MD).

"Somewhere around September, I contacted Don and said maybe this is something we can get through," recalled Paszkiewicz. "About five years ago, Maryland did get an exemption for 25¢ or less. Then, two years ago, we tried for a 50¢ exemption, but that's when the state had a deficit and no tax relief anywhere was passed that session. But now Maryland had a surplus again, and we thought our chances were better. So timing is everything."

Shortly after deciding to go ahead with their campaign for tax relief, Paszkiewicz and Goletz met with their state delegate and carefully explained that unlike other businesses, bulk vending operators, members of a profession largely composed of small-businessmen, did not have the option of raising prices incrementally in order to collect a sales tax. As Goletz pointed out, even a modest sales tax on bulk-vended items can virtually wipe away any anticipated gains an operator may realize by raising the price-points of his offerings. The delegate, who seemed open to the idea, was willing to sponsor a tax relief bill aimed exclusively at products sold from bulk venders.

"From that point, we talked about whether we needed a lobbyist and we decided to call the lobbyist we used before at Alexander & Cleaver. We negotiated and got a very favorable rate from them and decided it was worth it to bring the lobbyist on board again," said Goletz. "Then we had to go make a presentation in front of the House of Delegates and when it passed the House, we had to make a presentation in front of the State Senate." Once approved by the Senate, the bill was then sent up to the governor for his signature.

A crucial factor in getting the legislation passed, according to both Paszkiewicz and Goletz, was correcting the fiscal projections made by the legislators. By their estimates, tax relief for bulk vending would cost Maryland hundreds of thousands of dollars in lost revenue. Goletz and Paszkiewicz were able to demonstrate how the actual figure would probably amount to significantly less, offering their own estimate, which totaled under $50,000.

Also instrumental to the process was the financial assistance for the lobbying effort the pair received from the National Bulk Vendors Association. Toward such efforts, the NBVA will typically pay $10,000, or 50% of the negotiated lobbyist fees.

While the full effect of the tax relief will not be known for several months, it is assumed that the 75¢ exemption will act as an incentive for Maryland's bulk vending operators to raise their vend prices. With operators currently facing shrinking bottom lines and increased overhead costs at current price points, this could prove a major boost to Maryland's bulk vending industry.

Following the success of the Maryland effort, the NBVA is looking at additional states with surpluses that may be ripe for tax relief. "I'm on the NBVA legislative committee and we've done some research recently that shows seven states that have surpluses," said Goletz.

"That's Pennsylvania, Arizona, Texas, California, Massachusetts, New York and New Jersey," he added. " And we're going to narrow it down from there, where we want to focus. But if anyone is interested in putting it together in their state, Tom and I are more than happy to help guide them through this process. The NBVA is more than ready to help. Here's a major thing the NBVA can do that is very hard to do by yourself and one more reason why it's so important that this association stay strong."