RILA’s Brian Dodge: The new border adjustable tax is a dangerous and untested proposal built upon deeply flawed economics

Dollar Will Not Adjust As Backers Claim, Even In Long-Term, Hurting Consumers And Importers

Arlington , VA, 2017-May-24 — /EPR Retail News/ — An economic report released today (5/22/2017) from the international macroeconomics firm Capital Economics finds the economic theory behind the border adjustment tax to be a “gross simplification” of today’s currency markets. The report concludes that even in the long-term the dollar will appreciate no more than 8 percent in response to the House proposed border adjustment tax—well short of what proponents have suggested will be needed to offset higher costs on groceries, gasoline and thousands of items Americans buy every day.

“The new border adjustable tax is a dangerous and untested proposal built upon deeply flawed economics. The report shows the inevitable harm it will cause American families and businesses and it should give pause to lawmakers considering taking such a gamble with America’s economy,” said Brian Dodge, senior executive vice president for public affairs.

Available Empirical and Anecdotal Evidence Casts Doubt on Basic Exchange Rate Theory

The report, authored by economists Paul Ashworth, Justin Chaloner and Glyn Chambers, takes aim at the argument made by backers of the border adjustment tax that the policy will lead to a significant appreciation of the dollar, offsetting the impact on U.S. businesses and consumers.

Auerbach and Holtz-Eakin – “Border adjustments do not distort trade, as exchange rates should react immediately to offset the initial impact of these adjustments.” (Alan J. Auerbach, Douglas Holtz-Eakin, 11/30/16)

However, the report authors reject this premise, and found that any currency adjustment would fall far short of offsetting the harmful impact on American consumers.

“The notion of the border adjustment tax causing dollar appreciation is based on a simplification of currency markets, which are highly complex. The proposed measure has not been tried in any other country and there are many issues that pose a large number of questions as to what the consequences would be. Available empirical and anecdotal evidence casts doubt on basic exchange rate theory. Multiple barriers to adjustment plus the fact that traded goods and services only have a limited – possibly small – influence in determining exchange rates in today’s world of speculative capital flows means that we expect that most of the proposed appreciation is likely to fail to occur. Some adjustment could occur, but, given the considerable obstacles, we expect it to be no more than 30 per cent of the anticipated total, and it could well be a good deal less than that.”

Exchange Rate Doubts So Substantial BAT “Not Worth The Risk of Attempting It.”

Further, the report finds that the economic theory behind the dollar appreciation argument to be so unreliable that it is unlikely that currencies will adjust as predicted even in the long term.

“There are substantial reasons for believing that [full currency appreciation] will not occur, especially in the short run, but even over medium to long run timeframes and therefore it is not worth the risk of attempting it.”

Because Dollar Will Not Appreciate as Backers Predict, “Border Adjustment Tax Will Amount to a Tax on Consumers.”

“…retail markets are likely to experience the kinds of pass through rates seen in competitive markets. This means that the proportion of the expected exchange rate appreciation that does not occur (which we expect to be 70 per cent or more), which is the proportion of the tax that is passed onto American importing firms, is then likely to be passed on to ordinary consumers.

“Due to these likely price increases, the border adjustment tax will amount to a tax on consumers. It will have the effect of raising consumer prices, which will reduce real incomes and in turn living standards. Moreover, as with any tax on spending, it is probable that the impacts will be regressive in nature. That is, poorer consumers, who tend to save a lower proportion of their income and spend proportionately more, will be the hardest hit from the price rises stemming from the tax.”

BAT Backers’ Assumptions Are “A Gross Simplification of the Complexity of Today’s Currency Markets”

“…the confusing literature on exchange rate determination suggests that any exchange rate offset from border adjustment isn’t as predictable or as clear-cut as its proponents suggest because basic textbook theory is, at best, a gross simplification of the complexity of today’s currency markets. Given the large redistribution of wealth from importers to exporters that would happen in the absence of exchange rate adjustment and the many economic ramifications that could result from that, the policy is, at the very least, highly risky.”

About Capital Economics:

Capital Economics is a leading independent international macro-economic research consultancy, providing research on Europe, the Middle East, United States, Canada, Africa, Asia and Australasia, Latin America and the United Kingdom, as well as analysis of financial markets, commodities and the consumer and property sectors.

About RILA

RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

Contact:

Christin Fernandez
Vice President, Communications
Phone: 703-600-2039
Email: christin.fernandez@rila.org

Source: RILA

RILA appoints Jason Brewer as EVP, communications & state affairs and Brian Rose as director, state affairs & advocacy

Additions Signal Increased Focus On State Affairs

Arlington , VA, 2017-Mar-06 — /EPR Retail News/ — The Retail Industry Leaders Association (RILA) recently welcomed the addition of two new members to the public affairs team, Jason Brewer, who will serve as executive vice president, communications & state affairs and Brian Rose, director, state affairs & advocacy.

Jason Brewer, who was previously a member of RILA’s communication’s team, is returning after serving as vice president for government affairs and strategic initiatives at the American Hotel & Lodging Association (AHLA). Prior to joining AHLA, he spent six years playing an integral role in RILA’s communications and campaign activities, and in his new role, will lead the association’s communications and state affairs programs.

Brian Rose joins RILA from DDC Public Affairs, where he served in increasingly senior roles during his four-year tenure. As director of state affairs & advocacy, Rose will be RILA’s day to day lead monitoring state government affairs and will contribute to the execution of RILA’s public policy campaigns.

“We are thrilled to have Jason back on the team, bringing great experience and creativity to the industry’s advocacy efforts,” said Brian Dodge, senior executive vice president, public affairs. “Brian Rose is a talented campaign operative who will be a valuable resource to our members. Working together with our state partners, Jason and Brian will help the industry navigate complex issues at the state and local level.”

In addition to welcoming Brewer and Rose on board, RILA announced that RILA’s Senior Vice President for Government Affairs Joe Rinzel will be departing the association to become a partner at a public affairs firm, Align Public Strategies. In this role, Rinzel will continue to represent RILA as a client of the firm. Rinzel is departing RILA after eleven years overseeing our valued partnerships with state retail associations and guiding efforts on a range of policy issues.

“In his eleven years with RILA, Joe has been a tremendous asset to the team and to our members, both at the state and federal level. We look forward to continuing to rely on his skill and judgement in this new capacity,” added Dodge.

RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers.

Contact:
Christin Fernandez
Vice President, Communications
Phone: 703-600-2039
Email: christin.fernandez@rila.org

Source: RILA

RILA welcomes Christin Fernandez and Talana Lattimer to its communications and marketing team

Arlington , VA, 2016-Nov-05 — /EPR Retail News/ — Today (11/2/2016), the Retail Industry Leaders Association (RILA) announced the addition of two experienced professionals to its communications and marketing team, Christin Fernandez and Talana Lattimer.

“We are pleased to welcome Christin and Talana to RILA. They are both talented communication professionals with deep experience utilizing traditional and digital communications to advance organizational goals,” said Brian Dodge, RILA’s executive vice president for communications. “With their enthusiasm and experience, Talana and Christin will be a valuable addition to the RILA team.”

As Vice President for Communications, Christin Fernandez will serve as RILA’s primary media contact with responsibility for advancing RILA’s objectives to external audiences. Fernandez previously served as Director of Media Relations and Public Affairs at the National Restaurant Association. In that role, Fernandez led press and public communications strategy for several of the association’s priority initiatives, including food and environmental policy, tax and immigration reform, labor and workforce issues, commerce and entrepreneurship and industry reputation. Earlier in her career, Fernandez was a vice president at the public relations firm HDMK and a producer and assignment editor at the Fox News Channel.

Fernandez graduated from Lehigh University in 2007 with a degree in Journalism and Communications.

As Director of Digital Communications, Talana Lattimer will work with peers across the organization to develop strategic digital plans to achieve RILA’s goals and objectives. Previously, Lattimer spent four years with Americans for Safe Access (ASA), rising from Social Media Director to Operations Director. Among her responsibilities at ASA were the development and implementation of the organization’s marketing and public relations strategies. Prior to joining ASA, Lattimer was a Digital Media Coordinator for the Association for Career and Technical Education. Earlier in her career, Lattimer held positions with WHUT-TV, American Forum and the Terry McAuliffe for Governor Campaign.

Lattimer is a 2012 graduate of Howard University with a degree in Radio, TV and Film.

RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

Contact:

Brian Dodge
Executive Vice President, Communications and Strategic Initiatives
Phone: 703-600-2017
Email: brian.dodge@rila.org

Source: RILA

RILA: “mobile” may be the new buzz word for retailers in 2016

Arlington, VA, 2015-12-2 — /EPR Retail News/ — ​​This holiday season, a record number of purchases will be made with the use of a mobile device. Some of these purchases will be made in-store, using a smart phone to make the payment at checkout. And a growing number will be purchases made by consumers directly from their mobile device. Added together, and it’s clear that “mobile” may be the new buzz word for retailers in 2016. The House Energy and Commerce Committee will be discussing this transformative technology at a hearing this morning entitled, “The Disrupter Series: Mobile Payments.”

“With the holiday shopping season in full swing, now is the perfect time for Congress to discuss the dynamic changes at work in our economy, and we’re grateful to the House Energy and Commerce Committee for highlighting the mobile revolution that will impact retailers and consumers in the years ahead,” said Brian Dodge, executive vice president at the Retail Industry Leaders Association (RILA).

“Never before in history have consumers had access to so many different merchant platforms and a variety of payment technologies to choose from,” said Dodge. “For retailers, meeting this challenge has meant a massive investment in new payment terminals, workforce training, mobile shopping platforms and customer service to ensure we are meeting the needs of our consumers from product selection to check out—regardless of where it occurs.”

For decades, Black Friday symbolized the biggest and busiest shopping day of the year, with stores competing against one another with blockbuster sales to drive foot traffic. Just over ten years ago, Cyber Monday became synonymous with online shopping as retailers began to see spikes in online sales the day after the Thanksgiving weekend. This led to new sales strategies designed to attract customers shopping from their home or office. The advent of mobile platforms and payment technologies means consumers can now shop whenever they want wherever they want, and it will be up to retailers to address this challenge going forward.

“The expected growth of mobile shopping and mobile payments means holiday shopping will further evolve to meet the demands and preferences of consumers who now carry in their pocket a global shopping catalog and a bank in one device,” said Dodge. “Retailers embrace the challenge of using new technologies that enable them to interact with their customers at any given moment.”

And despite the growth of digital platforms, major retailers are still committed to an in-store experience that uses cutting edge technologies to ensure secure payments and a variety of options for the consumer.

“For consumers shopping locally, retailers have invested billions in both new machines and training to ensure consumers have a wide variety of payment options, and that the experience at checkout is as smooth and secure as possible,” added Dodge.

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Jason Brewer
Senior Vice President, Communications & Advocacy
Phone: 703-600-2050
Email: jason.brewer@rila.org

SOURCE: Retail Industry Leaders Association

RILA: retailers spend billions to accept new, more secure credit cards, commonly referred to as “chip” cards

American Banks And Credit Unions Continue To Issue Less Secure “Signature” Cards

Arlington, VA, 2015-9-22 — /EPR Retail News/ — A change is coming to the checkout. This fall national retailers are turning on newly installed payment terminals aimed at better protecting consumers from cybercrime and credit card fraud.  These machines are designed to accept new, more secure credit cards, commonly referred to as “chip” cards. These new credit cards will contain an embedded microchip that cannot be replicated, making it more difficult for hackers to use stolen card numbers to produce fraudulent credit cards.

Retailers are spending billions of dollars putting in place new payment terminals that are certified for chip card acceptance. This will ensure they are not held liable for counterfeit fraud usage when new cards make their way to the marketplace, and will ensure a more secure transaction for consumers compared to current technology.

“Retailers are making a multi-billion dollar investment to protect customers and reduce credit card fraud,” said Brian Dodge, executive vice president of the Retail Industry Leaders Association. “Unfortunately, retailers are only one-half of the equation, and at present, banks and credit unions are not meeting the retail investment with the same commitment to consumer protection.”

While retailers turn on new payment machines, there is one security feature missing from the new cards being issued by American banks and credit unions—an accompanying PIN number. Unlike the credit cards issued in Canada, Europe and the rest of the industrialized world, U.S. consumers are being issued “chip-and-signature” cards rather than “chip-and-PIN” cards.  The PIN adds an extra layer of security, and makes it even more difficult—if not impossible—for cybercriminals to replicate counterfeit cards.

Chip-and-PIN cards are already in wide use around the world and have significantly reduced fraud. For example, in the United Kingdom “chip-and-PIN” cards have reduced fraud by 67%.

“Chip and PIN has been proven to combat fraud dramatically,” added Dodge. “But that’s not what American consumers are getting, and thus far banks have gone to great lengths to blur the lines between the two distinctly different transactions.”

U.S. banks and credit unions have argued that the chip is enough, and will prevent counterfeit credit cards from being made. However, cyber-thieves have already begun to find ways to work around the chip, making the PIN a vital component of a more secure payment ecosystem.

In an effort to make sure consumers have the most modern means to protect themselves against fraud, retailers are urging banks and credit unions to ditch the signature and adopt the PIN.

“We know Chip and PIN works. At a minimum, American consumers deserve the same level of security afforded cardholders in Europe and Canada,” concluded Dodge. There is no legitimate excuse for why banks and card networks are willing to accept weaker card security here in the United States.”

RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

###

Jason Brewer
Senior Vice President, Communications & Advocacy
Phone: 703-600-2050
Email: jason.brewer@rila.org

RILA: VISA acknowledged that a staggering number of magnetic “swipe” cards have not been replaced with new cards

Arlington, VA, 2015-9-11 — /EPR Retail News/ — As retailers spend billions to upgrade their point of sale terminals to accept new “chip” cards before the October 1st liability shift deadline, the nation’s largest card network acknowledged that a staggering number of magnetic “swipe” cards have not been replaced with new cards.

The most recent numbers announced by VISA indicate that less than one-fifth (18%) of their 720 million debit and credit cards as of July contain a new embedded chip and will be ready for the October 1st EMV shift.

“Large retailers have made tremendous progress installing, testing and now operating new payment terminals to accept chip cards,” said Brian Dodge, executive vice president of the Retail Industry Leaders Association (RILA).  “But while consumers can now spot these new point of sale terminals at many large retailers nationwide, a quick check of the wallet will confirm that many continue to carry cards secured with the outdated and vulnerable magnetic stripe.”

With the October 1 deadline quickly approaching, it is more apparent than ever that most card issuers are not ready for the shift.

Throughout 2015, retailers have expressed frustration with banks and credit unions for issuing chip and signature cards, instead of the chip and PIN (personal identification number) cards issued everywhere else in the industrialized world. The PIN adds a second layer of security making lost and stolen cards impossible to use and counterfeit cards more difficult to create.  Two factor authentication has been the standard in the United Kingdom (UK) for almost a decade, reducing counterfeit card fraud by 56%.  Instead of issuing these cards to their American customers, banks and card networks in the US are only issuing chip and signature cards. Asked why, many bank and card network executives have suggested that Americans are not capable or remembering four-digit PINs, despite the fact that most Americans use PINs to unlock their cell phone on a daily basis.

“Simply put, consumers should be outraged that for banks and credit unions the solution to increased cyber-related fraud is to slowly issue substandard cards,” concluded Dodge.

RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

### ​

Jason Brewer
Senior Vice President, Communications and Advocacy
Phone: 703-600-2050
Email: jason.brewer@rila.org