Consumption-Tax Comments Rile NRF
New York City, The influential Federal Reserve Chairman Alan Greenspan bolstered the concept of consumption tax, which in the form of a national sales tax is bitterly opposed by retail interests. Greenspan described consumption taxes as a way to boost the economy when combined with income taxes. Greenspan testified before the President’s Advisory Panel on Federal Tax Reform, which was appointed by President Bush in January to explore various tax-reform options including a national retail sales tax and a value-added tax (VAT). The Bush administration has said it hopes to simplify the tax code.
The VAT, common in Europe, is imposed on the increased value of a product as it passes from manufacturing through distribution and, ultimately, to the consumer. The National Retail Federation was quick to condemn Greenspan’s comments. “We are extremely distressed to hear Chairman Greenspan speak favorably of any form of consumption tax,” NRF senior VP for government relations Steve Pfister said. “A national retail sales tax or VAT would devastate the nation’s economy for years before economic gains-if any-would be seen.”
Greenspan said powerful opposition would make the concept of a pure consumption tax and replacement of income tax unthinkable.
A study commissioned by NRF in 2000 found that a national sales tax would bring a three-year decline in the economy, a four-year decline in employment and an eight-year decline in consumer spending. Another study by the congressional Joint Committee on Taxation said a 57% rate would be necessary to replace all current federal tax revenue. A VAT would have largely the same effect.
PriceSmart Closes Chapter on Restatement
San Diego, PriceSmart has put an end to litigation related to its restatement of financial reports in late 2003. PriceSmart will pay $2.35 million to settle a shareholder lawsuit in federal court in California. The San Diego-based retailer said that about 80% of the settlement payment will be funded by the company’s insurance carrier. The retailer said the settlement does not constitute an “admission of liability” on the part of the company or its former officers. PriceSmart, a warehouse club operator, previously settled a separate federal court securities lawsuit and a state court shareholder derivative lawsuit. The company said the third settlement brings the litigation to a conclusion.
Ann Taylor Promotes Two Execs
New York City, Ann Taylor Stores Corp. promoted two of its executives to executive VP.
Adrienne Lazarus was named executive VP of Ann Taylor Stores merchandising and design. She was most recently senior VP and general merchandising manager for Ann Taylor Stores.
Donna Noce was promoted to executive VP of Ann Taylor Loft merchandising and design. She most recently served the retailer as senior VP of Ann Taylor Factory Stores.