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BAT dropped from tax reform effort

BY Deena M. Amato-McCoy

The import tax proposal has officially been removed from the tax reform plan — which is welcome news for retailers across the industry.

On Thursday, congressional and administration leaders announced they would remove the Border Adjustment Tax from consideration, and announced an outline for comprehensive tax reform. The BAT provision would have ended importers’ ability to deduct the cost of merchandise purchased from other countries. 

The tax was initially considered a way to fund tax cuts, but it prompted a fierce backlash from retailers, as well as other import-dependent industries and activists that argued the tax would result in higher prices for consumers. The National Retail Federation estimated this tax could have costed the average family as much as $1,700 annually.

“By removing this costly element of reform, the way has been cleared for swift action on a middle-class tax cut that will put more money in the wallets of the American taxpayer,” NRF president and CEO Matthew Shay said. “Changing our outdated tax code is fundamental if we are to grow our economy, encourage investment and create jobs.”

"Today's announcement is an important victory for American families and businesses who desperately need tax reform and who would have been harmed most by the border adjustment tax," said Sandy Kennedy, president of RILA. "With BAT out, Washington has an opportunity for the first time in more than a generation to pass a tax reform plan that boosts American businesses and family budgets.”

The decision supports retailers, as merchants “pay the highest effective corporate tax rate of any sector of the U.S. economy,” NRF’s Shay said. “Broadening the tax base and lowering the corporate tax rate will allow our industry to compete effectively in the global marketplace, particularly without the additional burden of a border adjustment tax. In the end, our workers and the consumers they serve are the ultimate beneficiaries of this effort.”

Members of NRF, RILA as well as executives from national brands have been diligent and vocal in their efforts to get the tax consideration removed. In May, 20 retail executives traveled to the nation's capitol to voice their opposition to the proposed border adjustment tax (BAT). The delegation included leaders of small businesses, such as Random Harvest from Virginia and Washington, D.C., as well as executives from national retail brands, including Ascena Retail Group, AutoNation, BJ’s Wholesale Club, Dillard’s, Ikea, Levi Strauss, Pier 1 Imports and QVC.

Republicans have reiterated that they are committed to passing comprehensive tax reform that lowers rates without creating a new border tax that would shift the burden to consumers. They also reported they plan to start to work on a joint tax plan through committees by this fall, according to CNBC.

 

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McKesson Q1 revenues up 3% to $51.1 billion

BY Michael Johnsen

SAN FRANCISCO — McKesson on Thursday reported revenues of $51.1 billion for the first quarter ended June 30, up 3% compared to the year-ago period. First-quarter adjusted earnings per diluted share was $2.46, down 22% compared to $3.15 a year ago.

“McKesson’s first-quarter operating results were consistent with our expectations,” stated John Hammergren, chairman and CEO, McKesson. “We’re off to a solid start to the year and are raising our previous fiscal 2018 Adjusted Earnings outlook to a range of $11.80 to $12.50 per diluted share. In addition, we generated strong first-quarter cash flows, which allowed us to allocate capital in line with our portfolio approach to capital deployment.”

Distribution Solutions revenues were $50.9 billion for the quarter, up 4% on a reported basis and 5% on a constant currency basis. North America pharmaceutical distribution and services revenues of $43 billion for the quarter were up 4% on a reported basis and 5% on a constant currency basis, primarily reflecting market growth and acquisitions.

First-quarter results included the lapping effect of the lower profit contribution from increased price competition in McKesson's independent pharmacy business in fiscal 2017 and weaker pharmaceutical manufacturer pricing trends in the wholesaler's U.S. Pharmaceutical business within the Distribution Solutions segment, and lower profit in its Technology Solutions segment driven primarily by the contribution of the majority of the businesses to Change Healthcare.

 

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Study: Majority of retailers adding AI tools within two years

BY Deena M. Amato-McCoy
Eager to improve customer communication, a majority of retailers plan to increase in the use of artificial intelligence moving forward.
 
This was according to “How AI Technology Will Transform Customer Engagement,” a report from Linc and BrandGarage. The study polled 104 senior-level marketing and e-commerce executives from leading retail brands.
 
Retailers are increasingly evaluating how to alleviate points of friction for their shoppers — a move that can lead to improved customer loyalty and satisfaction. However, 55% of retailers said that their customer service costs are rising, making it hard to achieve their goals. 
 
Increased human resources are the number one factor for these swelling costs, followed by higher shipping, logistics and reverse logistics expenses. However, retailers cannot afford a slip in customer service, as over 80% of customers will look to other brands for a more satisfactory experience after just one bad encounter, according to data.
 
As a result, 87% of retailers plan to increase their use of AI in customer service, and 44% will use a conversational commerce interface. While only 7.7% of retailers have rolled out AI as a regular part of customer service to-date, adoption is growing rapidly. 
 
Already 34% of retailers reported they have begun experimenting with customer-facing AI trials or pilots. An overwhelming majority plan to embrace AI in the next 24 months, as they seek AI-powered solutions to improve customer service and engagement, the study said.
 
One in five retailers already believe voice will be an important channel along with chat within two years. As voice-first platforms grow, 44% of retailers that are increasing their use of AI will do so through a conversational commerce interface such as Facebook Messenger and a voice platform like Google Home or Amazon Alexa.
 
Retailers’ use of AI will also extend beyond routine customer service requests. Rapidly rising customer expectations mean that a wide range of questions need to be answered quickly across various channels of engagement. 
 
To answer these questions, 68% of retailers plan to use AI to route customer service requests, 52% will use AI to help track packages, 43.5% will use AI for product suggestions and 42% want AI to handle returns and exchanges in the next two years. The role of AI will not be limited to post-sale service, either. AI will also be used to answer pre-purchase questions (39%) and for marketing (38%).
 
“The data provided by this survey is a clear indicator that the time is now for retailers to take action,” said Luke Starbuck, VP of marketing, Linc. “Sitting back and waiting to see what others do is not a defensible strategy and will not yield favorable results. Retailers need to act quickly to adopt AI technologies that will help them win and retain customers.”

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