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Issue link: https://read.dmtmag.com/i/193494
TOP OF THE NEWS NACS President and CEO Henry Armour Comments at Swipe Fee Fairness Hearing A step towards a settlement in antitrust litigation N ACS President and CEO Henry Armour delivered testimony on Sept. 11 before U.S. District Judge John Gleeson in Brooklyn, New York, at the fairness hearing to consider granting approval to a proposed settlement of a longstanding antitrust class action filed by merchants against Visa, MasterCard and the largest banks. The hearing is the latest contentious step in moving forward the proposed settlement of longstanding antitrust litigation between merchants and the credit card industry proposed settlement of the case, which is known as "In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation." NACS expressed its opposition to the terms of the proposed settlement on the day that it was announced in July 2012. Following are Armour's remarks: NACS and the majority of the named plaintiffs have filed objections to the settlement. NACS has opted out of the monetary portion of it. We have also filed a response to correct inaccuracies in a recent declaration from class counsel. From the beginning of this litigation, our principal concern has been to obtain meaningful reforms of the credit card market to restrain the undue market power being used to set fees. Anti-competitive practices have resulted in our industry paying more in card fees than it makes in pre-tax profits every year since 2006. The vast majority of our industry is made up of small businesses. In fact, 60 percent are single store operators. Because our industry pays such huge fees, $11.2 billion in 2012, NACS has had n Report: Federal Tax on Gasoline is Obsolete On October 1, the federal gas tax marked twenty years stuck at the rate of 18.4 cents per gallon. This anniversary occurs "against a backdrop of chronic infrastructure underfunding and federal budget crises," the Institute on Taxation and Economic Policy (ITEP), says upon the release of "A Federal Gas Tax for the Future," a new report. The report concludes that just 22 percent of the current gas tax revenue shortfall can be attributed to rising vehicle fuel-efficiency taking a bite out of gasoline purchases. The other 78 percent of lost gas tax revenues are due to inflation: inevitable growth in the cost of asphalt, machinery, and other construction inputs www.npnweb.com n NPN Magazine thousands of conversations with our members about interchange fees and discussed the problems and potential solutions in depth. This settlement, unfortunately, ignores the views of NACS, the majority of named plaintiffs and other merchants including NACS 30-member board of directors made up of small and large retailers from around the country. We raised our concerns early and often, and we have now been joined by merchants far and wide. The primary rules relief in the settlement, surcharging, is completely unworkable because of negative consumer reactions to surcharging, state laws that prohibit it, and the level-the-playing field provisions. Most telling is the fact that since February when retailers have had the ability to surcharge under the settlement there has been virtually no movement in that direction. That is compelling evidence that the ability to surcharge has no value to the class. Further this settlement has the potential to make things much worse by giving the Defendants an incredibly broad release of claims for future bad conduct. This settlement is worse than losing at trial. Losing would not bar the courthouse door to merchant challenges to future unfair card industry practices including current bad practices being applied to new technologies like mobile payments. The settlement provides nothing of any real value beyond the money. And the scope of the release will allow the Defendants to raise rates and recoup the money before it is even distributed to merchants, which is precisely what happened in the Visa check case. We strongly urge the Court to reject this settlement. with which the twenty-year-old gas tax has not kept pace. "A lot of people are focusing on hybrid and fuel-efficient vehicles as the reason the gas tax is falling short," said Carl Davis, senior analyst at ITEP and author of the study. "But predictable growth in the cost of asphalt, machinery, and other construction materials has been the bigger issue by far." Davis added: "If Congress had just planned for inflation when they last overhauled the gas tax, three-quarters of the revenue shortfall we're facing today wouldn't exist. If they'd also indexed the tax to fuel efficiency, we'd have no shortfall at all." "A Federal Gas Tax for the Future" explains that inflation's impact on taxes and revenues is a simple policy problem that Congress can solve. In fact, numer- ous income tax exemptions, deductions and credits are already designed to rise in direct relation to inflation. And seventeen states, home to over half the country's population, levy their gas taxes such that the tax rate is automatically adjusted to keep pace with inflation, according to the report. In 1997, the federal government began directing 100 percent of gas tax revenues towards transportation (prior to that, a small portion went towards the general fund). ITEP's report finds that if the government had also structured the gas tax to grow with both inflation and fuel-efficiency starting that year, the tax rate today would be 10.6 cents higher and over $215 billion in additional revenue could have been raised over the last sixteen years. For the average driver, this change would OCTOBER 2013 5