PUSH TO REPEAL ESTATE TAXES URGED FOR 1998

WASHINGTON (FNS) -- The battle to reform estate taxes is likely to be only partially successful this year, but supermarket and wholesaler executives are being urged to look beyond 1997.Sen. Jon Kyl, R-Ariz., advised industry executives last week to channel their disappointment with this year's likely modest estate tax reform into building momentum for a repeal next year. He spoke to members of the

WASHINGTON (FNS) -- The battle to reform estate taxes is likely to be only partially successful this year, but supermarket and wholesaler executives are being urged to look beyond 1997.

Sen. Jon Kyl, R-Ariz., advised industry executives last week to channel their disappointment with this year's likely modest estate tax reform into building momentum for a repeal next year. He spoke to members of the National Grocers Association and Food Distributors International during a joint Washington conference and program on Capitol Hill geared to lobbying.

Kyl said that meaningful estate tax reform was sacrificed for capital gains tax reform in the two versions of an $85 billion tax cut plan before the House and Senate.

"Sometimes we have to deal with realities," Kyl told the group. "Many things we wanted in the budget package weren't there."

Kyl sponsored a bill that would repeal the estate tax, which levies taxes of up to 50% on the assets of family-owned businesses when a principal dies. Current House and Senate reform proposals would raise the level of assets exempt from the levy from $600,000 to $1 million. The House plan would incrementally raise the exemption over the next 10 years. The Senate plan would incrementally raise the exemption to $1 million over the next 11 years, but includes a provision that would give an additional $1 million exemption to family-owned businesses.

The grocery industry is angling to get the 10-year phase-in together with the additional $1 million family-business exemption in the final package, which will be devised when House and Senate negotiators meet to reconcile the two packages after the Fourth of July recess.

Kyl said congressional budget negotiators reasoned that a cut in capital gains taxes would do more to boost the economy than a major reduction in the estate tax. "A cut in the capital gains rates, if enough, will produce more revenue if people transfer assets," he said. "It will help the economy grow."

He recommended that the grocers and wholesalers instead ask for an ultimate repeal in their meetings with members of Congress. "I'd like to retain the political base to make the case for a repeal next year or the next," he said.

"Everyone should be upset enough to seek a repeal later. My suggestion is that you be realistic. If you ask for a repeal of the estate tax this year it won't happen. Instead, you should get a commitment from your representatives that they will work for a repeal in the next tax relief bill. If we get that message out, we'll get something meaningful."

Other items on the agenda of the group include several labor issues, such as a bill dubbed the TEAM Act, which would give employers the authority to convene joint management-employee meetings to discuss such workplace matters as job safety and benefits. Organized labor has opposed the plan for fear it would undermine unions. The grocery industry favors the plan.