San Francisco–Now that the U.S. Postal Service has said it doesn’t intend to raise rates for at least another three years and the war with Iraq has ended without causing major economic disruption, catalogers may be feeling more optimistic about the immediate future. But according to H. Robert Wientzen, president/CEO of the Direct marketing Association, they shouldn’t.
In an exclusive interview with CATALOG AGE prior to the opening of the Annual Catalog Conference, Wientzen warned direct marketers against complacency.
Take the apparent freeze on postal rates: “No one said your rates are guaranteed not to change,” Wientzen said. “What the [postmaster general] said is, We thing, we believer, hope, expect that rates won’t change until 2006. If the USPS’s revised forecasts aren’t met, the way the law is written, it still has to gather enough money in postage to pay for the operations of the Postal Service.”
The agency’s revenue for the previous accounting period “was below its forecasts by a pretty good amount,” Wientzen added. “So we shouldn’t get too cocky, because it may get worse.”
Besides, 2006 isn’t that far away. If the Postal Service plans to increase rates in 2006, it will have to start a rate case in 2005. And if postal reform legislation isn’t passed by then and the USPS “continues to experience a drop in first class mail, there could be a huge deficit,” Wientzen said. “We could end up getting the biggest [postal rate] increase in history…Catalogers could be in for a really rude awakening in 2006 if we don’t fix the postal service before then.”
Postal reform isn’t the only legislation that concerns Wientzen. There are also numerous state and federal bills regarding the collection of local sales taxes from remote sellers. The temporary Internet tax moratorium expires in October, and while that legislation ostensibly protects against taxation of Internet access charges, “the real target here is catalog sales,” Wientzen said.
What with a number of states passing tax simplification plans in hopes of persuading Congress and the Supreme Court to allow for the collection of sales taxes from out-of-state sellers, “we almost lost this battle last year,” he added.
In the face of such threats, what’s a cataloger–particularly a smaller player–to do? Get involved, Wientzen said.
“We have to get the states to understand the impact on catalog companies and employment in their state if they require collection of taxes in their state,” Wientzen said. “So it’s very important–especially for small catalogers, because they have more important than a large cataloger who has no presence in a state.”