Montana Considers Tax on Big-Box Stores

Date: 8 Feb 2005 | posted in: Retail | 0 Facebooktwitterredditmail

“That giant sucking sound you hear coming from the edge of town is the sound of money being taken out of your community by big-box stores,” said Montana Senator Ken Toole, who has introduced a bill that would levy a tax on the state’s big-box stores.

The bill would impose a progressive tax on stores with more than $20 million in annual sales. Revenue of $20 to $30 million would be taxed at 1 percent. The tax would rise to 1.5 percent for revenue in excess of $30 million and 2 percent for any revenue over $40 million.

A typical Wal-Mart store takes in about $70 million per year, but sales vary widely depending on the size and location of the store.

Senator Toole contends that the tax is necessary to offset the higher costs big-box stores impose on the state. Sprawling superstores drive up the cost of local services such as roads and police. Low wages and inadequate benefits force many superstore employees to rely on public assistance programs to get by.

The bill exempts stores where at least three-quarters of the employees work full-time and earn compensation of more than $22,000 a year (including both wages and benefits). “If Wal-Mart and other big box stores don’t want to pay the tax, all they have to do is pay their workers a little more. They can afford it and we should demand it,” Senator Toole contends.

The tax would generate an estimated $15 million in 2006 for the state’s general fund.

The Montana Retail Association, which represents both small and large retailers but derives most of its dues from national chains, vehemently opposes the legislation, arguing that big-box stores should not be singled out and that the tax is bad for business development.

“Is it bad for the locally owned retailers who are getting crushed by box stores? Is it bad for the local service companies who don’t get any business from big box stores?” Toole counters.

A December poll found that the state’s citizens narrowly support the tax by 49 to 44 percent. The poll found a substantial gender gap, with 55 percent of women supporting the tax and 53 percent of men opposed.

A similar bill failed in the Senate last year by a 26-24 vote. It was supported by most Democrats and a handful of Republicans. This year, Democrats have a larger majority, which should improve the bill’s chances.

Regardless of whether it ultimately passes, Dick King of the Montana Economic Developers Association believes the proposal has generated a worthwhile public discussion about the need to focus on development that creates quality jobs.


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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Independent Business Initiative, which partners with a wide range of allies to implement policies that counter concentrated power and strengthen local economies.