OPINION: New Cash Transaction Rules Hurt Farmers MarketsMarch 8, 2013, 1:45 PM HST (Updated March 10, 2013, 8:40 AM)
For the thousands of vendors operating at open markets statewide, time is money.
With a short window of time to make sales, and a sea of customers eager to pick up their produce and move on, super-quick cash transactions are common.
The scene is often chaotic, but both sides usually know the rules. Customers come bearing stacks of one-dollar bills, often aware of the angry stares they will receive from vendors and fellow produce-hunters should they flash a “50” and hold up the line.
Purchases under $5 are common, and many of the goods for sale can be bought for a cool 100 cents. Frequently, vendors serve two or three customers at a time, with some customers grabbing their own produce or baked goods and leaving payments on the table.
For many sellers, one five- or six-hour window of time on a Saturday morning may represent their only opportunity to turn a profit that week.
With Hawaii’s agricultural economy in decline, Gov. Neil Abercrombie has made raising the supply of locally grown produce a pillar of his “A New Day in Hawaii” platform.
Unfortunately, a bill advancing at the state Legislature would make it more difficult for many small-scale farmers and other entrepreneurs to survive in Hawaii.
Senate Bill 1196 would require anyone conducting cash transactions to offer a receipt for each sale made, and would expect them to maintain records of every transaction.
For small farmers doing hundreds of single-digit transactions in just a few hours, keeping track of tens of thousands of receipts in a given year is a proposition that is, frankly, absurd.
Most small growers already spend long hours in the field. The night before a market sale, many will stay up all night weighing or washing produce before packing their vehicles, hauling their goods to a site, and unloading hundreds of pounds of goods for their temporary storefront.
While it may seem at first glance like an easy chance to “make a buck,” life for mobile vendors, and in particular farmers, can be quite grueling and precarious.
Once sales are underway, serving customers quickly is critical. Delaying transactions by tallying up sales on a register, then waiting for receipts to print can mean frustrated, impatient customers. Holding up a line for too long often means would-be buyers will simply move on.
For many sellers, diminished sales of even 15% or more can make a huge impact on their monthly income and quality of life.
Under current law, only vendors who conduct more than 10 business transactions in a day have to keep receipts and maintain records. Many vendors already ignore those current rules, as the potential loss of weekly sales by taking the time to record transactions heavily outweighs the threat of fines for failing to furnish receipts.
Vendors who do choose to comply with the rules must compete with the faster transactions provided by the sellers who ignore them.
Of course, how effective the new rules under SB 1196 will be is going to depend on the level of enforcement.
A 2010 report by the Honolulu Star Advertiser tallied up the efforts at compliance by the Department of Taxation that year. Five investigators and one field auditor reportedly issued 88 citations worth $36,000, collecting $11,000 in payments by November of 2010.
With literally thousands of vendors statewide operating on evenings and weekends, it seems unlikely the Department of Taxation would have even a sliver of a chance at realistically enforcing the new rules, much less collecting the fines they issue.
In reality, these guys know they can’t inspect vendors personally. Instead, regulators should attempt to work with the markets themselves to encourage self-reporting. Why not develop a cell-phone app that allows vendors to report same-day sales directly to the department of taxation?
Will they report all their income? Oh course not. But with an easy-to-use system, many vendors will consistently report something in an attempt to stay within the law, and avoid an audit.
Even a 20% boost in revenues from a quick, simple reporting system would far outweigh the cost of sending tax regulators out on weekends to shake-down vendors.
As it is written, Senate Bill 1196 will simply harm those who choose to comply.