For the Record
I didn’t make as directly a causal argument as Nandini Jayakrishna makes it sound in her Brown Daily Herald article as her final rendering makes it sound:
Though Maselli and Ucci said the bill is consumer-friendly, others think it might end up harming shoppers.
“Businesses are not just going to eat the cost of this legislation,” said Justin Katz, who writes a conservative blog on Rhode Island politics called Anchor Rising. “They will pass on the cost to all consumers.”
Katz, who criticized the bill in his blog, said such bills drive businesses out of the state.
“Rhode Island is driving out people with money year in and year out,” he said. “In the past two years, half a billion dollars of taxable income has left the state.”
Katz said a surcharge is the price customers pay for convenience and that a bill banning it reflects the “totalitarian mindset” of the legislators.
“I hope it doesn’t pass this year again,” he added.
But Ucci said it is “ludicrous” to think the legislation will force businesses to leave the state.
“That’s crying wolf,” he said. “If you see who is charging a surcharge – it’s Providence Place Mall. It’s not going to close.”
Yes, it would be ludicrous to claim that businesses will have to close their doors and cross the border because they can no longer charge a couple of dollars extra for gift certificates. My point, as I emphasized here, was that, in response to Rep. Maselli’s insistence that, if companies are losing money on the sale of gift certificates, they should just stop providing them. If a company finds that to be the case, but still sees a high demand for gift certificates, it will just pass the cost on to consumers one way or another.
The article goes on to quote local businesses that do not charge for gift certificates; indeed, one of them offers a 10% discount on them. That’s because these boutique stores understand that they profit just by getting more people in the door. It’s like a payment toward word-of-mouth advertising, and that’s a wonderful approach. It seems to me that allowing larger companies — which have invested in brands in which gift recipients are specifically interested — to charge for gift certificates only benefits the smaller stores.
Bringing the Providence Place Mall into the picture doesn’t help Ucci’s point. The mall doesn’t directly profit from offering a gift-certificate service. Now, one can argue (and I would do so, by the way) that the mall gift certificates attract people to the mall, and that those folks shopping and stopping by the food court encourage the stores to continue to pay the surely high rent. One can argue, that is, that it doesn’t make business sense for companies to charge for gift certificates, but legislators in this state seem to have a very difficult time understanding that not everybody in the state works for them.
That is the totalitarian mindset that I’m decrying: under the guise of helping the helpless consumer, the legislators get to play dictators.