Small-Business Advocate Rips Proposed Price Hike

The National Federation of Independent Business voiced concern yesterday about the harm postal increases have on small-business owners.

The small-business advocacy group also called on Congress to enact legislation to reform the U.S. Postal Service.

The comments came as the USPS filed a rate case with the Postal Rate Commission on Friday announcing its plans to seek a 5.4 percent across-the-board rate increase in early 2006.

The cost of a stamp was last raised in 2002 when the price of a First-Class stamp climbed from 34 to 37 cents. At that time, NFIB released its Regulatory Impact Model study on postal rate increases, which indicated that rate increases would cost small business $2.5 billion.

“Small business is always in danger from stealth tax hikes,” said Dan Danner, NFIB executive vice president of public policy. “Like all regulations, this postage increase will end up costing more than just a couple of cents for the Main Street business owner who depends on mail service as a way to market services and products to potential customers.”

According to statements by postal officials, the decision to seek a rate increase is due to the postal service's legal obligation to fund a $3.1 billion escrow requirement. Legislation under consideration in both the House and Senate aims to reform the postal system. Postal officials have stated that if legislation were enacted to eliminate the escrow funding requirement, the request for the rate increase would be withdrawn.

The results of 2002 research detailing how small-business owners react to postal issues found that the average small business spent about $338 monthly with the postal service, or about $4,000 a year. However, this varied substantially by the size of a particular business, with firms employing 10 people or fewer spending about $239 monthly and those with 20 or more employees spending more than $1,000 monthly.

Analysis provided from the RIM study suggested that to pay for the postal increases, about $60 million of disposable income would be removed from the economy.

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