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Grocery Retailers, Industry Associations Praise Passing of Senate Tax Overhaul

In the wake of the U.S. Senate’s vote to pass its tax overhaul bill, a number of grocery retailers and industry associations spoke out in its favor.

The bill would, among other things, cut the corporate tax rate from 35% to 20% in 2019 and lower taxes on pass-through business income.

Kroger CEO Rodney McMullen said that the retailer is excited for where tax reform is headed, but that he preferred the House version because it goes into effect almost immediately instead of delaying action for a year as proposed in the Senate’s bill.

“We believe it will also influence us to continue to invest in our business, which will grow jobs. And I think what will end up happening is you will see us do a balance of everything together—some of it our shareholders will benefit from, some of it our associates will benefit from, and our customers will benefit from it as well because we really view that as what drives the sustainable business that continues improving overtime,” he said during the retailer’s earnings call last week. The bill would also offer an opportunity for Kroger to continue creating jobs, he added.

Grocery Manufacturers Association President and CEO Pamela G. Bailey urged the Senate and House to reconcile any differences between their approved bills so that “the first major tax overhaul in 30 years” can be signed into law, saying that tax reform would benefit consumers, workers and manufacturers alike.

“The Senate vote is a critical breakthrough towards final approval of a tax reform bill that will help American manufacturers stay competitive and fuel the purchasing power of our nation’s consumers,” Bailey said in a statement. “The food, beverage, and consumer products industry has long supported common-sense tax reform to help level the playing field for American manufacturers and workers.”

FMI Chief Public Policy Officer Jennifer Hatcher commented that raising the pass-through deduction to 23% and providing for a $10,000 deduction for property taxes—along with the new corporate rate of 20% and doubling the standard deduction—will benefit FMI’s member companies and customers.

“FMI is very pleased with the additional improvements in the Senate Tax Cuts and Jobs Act,” Hatcher remarked in a statement. “A fairer, simpler tax code not only benefits grocers and their employees, but also their customers, and we are excited with the progress that has been made.”

Greg Ferrara, SVP of government relations and public affairs at the National Grocers Association (NGA), called the move a “once-in-a-generation tax reform bill and commended Senators Johnson (R-Wis.) and Daines (R-Mont.) for their “steadfast” efforts to provide additional tax relief for pass-through businesses.

Ferrara said in a statement that the tax overhaul will help create jobs and will benefit retailers in the high-tax supermarket space, adding that the majority of independent grocers operating on just 1% or 2% net profit margins will now have better resources to hire additional staff, expand offerings and upgrade their stores.

“By raising the deduction for pass-through business income, the Senate helped create a more level playing field for all grocers,” Ferrara said. “House and Senate conferees must preserve these reforms so that Main Street supermarkets can benefit from tax reform. NGA urges Congress to send a final bill to the President’s desk as soon as possible so independent grocers can continue to invest in their companies, employees, and communities.”

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