FMI RAISES RED FLAG OF CONSUMPTION TAXES

CHICAGO -- If Republicans retain a majority of the House and Senate in the next administration, there may be an effort to change the tax code from the traditional income tax to a consumption tax, Tim Hammonds, president and chief executive officer of Food Marketing Institute, told FMI members during the Speaks portion of the FMI Show last week."It's a real heads-up for the industry," said Hammonds.

CHICAGO -- If Republicans retain a majority of the House and Senate in the next administration, there may be an effort to change the tax code from the traditional income tax to a consumption tax, Tim Hammonds, president and chief executive officer of Food Marketing Institute, told FMI members during the Speaks portion of the FMI Show last week.

"It's a real heads-up for the industry," said Hammonds. "If we do retain majority in the House and Senate -- a second term for President Bush -- it's crystal clear there is going to be a huge debate in this country about changing our tax code and moving away from our traditional income tax to some form of consumption tax. We haven't really thought about this seriously as an industry because it wasn't seriously under discussion before, but it will be. As food retailers, we would be collecting a lot of this tax."

More immediate concerns for FMI are getting a two-year delay in the country-of-origin labeling for seafood, and pushing forward with a voluntary COOL program, said Hammonds.

In terms of food safety, FMI recommended retailers make sure their suppliers adopt the Safe Quality Food program from the SQF Institute, a division of FMI. It is a third-party certification program based on internationally recognized principles of food safety, including Hazard Analysis and Critical Control Point (HACCP) systems, Codex and Quality Management systems. It covers all food groups and all aspects of food production, including distribution, storage and transportation of fruits and vegetables, dairy and egg products, meat and poultry, seafood, and all processed food and beverages.

"This is an issue we've worked on for more than four years," said Hammonds. "We are delivering it now, just in time. We are facing a situation where customers are looking to retailers more and more for an additional guarantee of safety. SQF is an audit program that is backed up by standards and training for suppliers that let's you as food retailers say 'we've gone the extra mile' to be sure that our suppliers are all implementing good quality-control programs in their production operations, even in growing operations in other countries. It let's you as retailers request audits from those companies. We can then say to our customers, 'We've done everything possible to make sure you are getting high-quality, safe food."'

Hammonds also cautioned the membership to be prepared to handle questions on the new Medicare drug policy, which he called complex. "It's a complicated issue for your customers who will be coming in with discount cards in which the elderly have the opportunity to get government money to help them purchase their prescriptions. They are going to be very confused, and your pharmacists are going to help them answer questions."

On other fronts, credit card costs continue to be an industry issue. "The bad news about winning that lawsuit [Visa/Mastercard] is not all of their fees were controlled, and the banks have been driving up the fees wherever they can," said Hammonds.

FMI along with Grocery Manufacturers of America made progress in reducing Internet coupon fraud, Hammonds said.

Through a joint FMI/ GMA committee, discussions with eBay took place about the problem. EBay subsequently instituted new rules on the mass selling of coupons to help cut down on counterfeits. Letters also were sent to all State Attorney General offices; this resulted in arrests. "Our message to the college kids home on spring break is that this is not a victimless crime," Hammonds said.