(Sample Letter Requesting Exemption From Sales Tax On Sales Through Bulk Vending Machines)
Honorable John Legislator
City Hall
Any Town, U.S.A.
Re: Sales Tax Relief
Dear Mr. _________________________:
We need your support for legislation to exempt from
sales tax the sale of merchandise through bulk vending machines. Bulk vending machines
represent less than 1% of the vending industry.
A bulk vending machine is defined as follows:
- "A non-electrically operated vending
machine, containing unsorted confections, nuts or merchandise which, upon insertion of a
coin, dispenses the same in equal portions, at random and without selection by the
customer."
Because a vending machine is in a sense unattended,
many people have a misconception as to the profits to be derived from this business. Bulk
operators are basically small businessmen who work hard on small profit margins to earn
their livelihood from these machines. The enclosed analysis of the annual operation of a
typical gumball and charm vending machine should prove most enlightening to you. [ Be sure to attach profit analysis. ] This analysis clearly shows
that in order to earn a decent living for his family, an operator must have a great number
of vending machines on location since the per machine profit is so small.
We think you will be surprised that the revenue is as
small as it is from our machines. Most people tend to lump us in the same category as the
large cigarette, coffee, candy or sandwich vending machines. There is a vast difference in
revenues and profits. The cost of a typical bulk vending machine ranges from $40 to $60
each, compared to $1,000 to $3,000 for the larger electrically operated machines. The
annual sales volume of ball gum machines is only $100 per year and for our capsule vending
machines about $225 per year. Yet the average sales volume of the larger electrically
operated machines exceeds $4,000 per year, according to a recent Vending Times Annual
Survey of the industry.
We realize that government needs additional revenue
with which to operate. But in our business, unfortunately, when our costs increase the
revenue we receive for our merchandise stays exactly the same. We cannot pass taxes and
license fees on to our customers. Our coin slots cannot be changed. We cannot pass on
taxes to customers and we cannot afford to absorb them!
We stand ready at any time to answer any question or
furnish you with additional information regarding our industry and the practices of our
operators. We would appreciate the opportunity to be present at any Committee Hearings on
this Bill and present the testimony of operators which should convince the other members
of your Committee as to the merits of this Bill.
For these reasons, we appreciate and support your
sponsorship of the proposed legislation.
We look forward to working with you in the future.
Very truly yours,
(Sample Letter When Each Machine On A Rack Is Charged Separately)
(Address to the person in charge of
licensing
in the municipality, such as City Clerk,
Village Manager, or the like.)
Re: Per Machine Licensing Fees
Dear Mr. _________________________:
Our company operates bulk vending machines in chain
stores and various other locations in your city. The type of machine we operate are the
1¢, 5¢, 10¢ and 25¢ machines for children. We sell ball gum, nuts, confections and
miniature toy novelties. Bulk vending represents less than 1% of the vending industry.
We are writing this letter with regard to the
excessive license fees charged by your city in the amount of $________ for each vending
machine. These fees are extremely high and confiscatory.
Our type of machines are placed usually four or six to
the stand. Each ball gum machine produces between $100 and $200 in annual gross sales
(depending on location and products) with an annual gross profit margin of about 3% per
year. The cost of each machine is about $50.
The machines referred to in your licensing ordinance,
however, are the more sophisticated electrically operated machines that may cost $1,000 to
$3,000 and annually produce sales in excess of $4,000 per machine per year, with hundreds
of dollars in annual gross profit per machine.
These larger electrically operated machines contained
from 5 to 20 varieties of items per machine, yet there is only one licensing fee per
machine. For example, a candy machine has many choices of candy items, yet only one
license fee is required. Likewise, food and soft drink machines also have a variety of
items, yet only one license fee is required for the entire machine.
Is it then fair to tax separately each of our machines
on the stand, all of which are less expensive, unsophisticated machines producing lower
sales and lower profits? We are confident that when your ordinance was drafted, the
draftsmen were not aware of the confiscatory effect which this type of ordinance has upon
our bulk vending machines.
We therefore request that this inequity be changed and
that by administrative regulations or legislation, if necessary, the stand on which the
bulk vending machine are placed be considered as one unit with only one fee applicable for
all machines on the stand.
Many other cities across the country have granted
similar relief and treat the stand as one unit, rather than each machine as a separate
taxing unit. A partial listing of these cities is available from our trade association.
Copies of this list can be furnished upon your request to the National Bulk Vendors
Association at 200 North La Salle Street, Suite 2100, Chicago, Illinois 60601.
May we please hear from you at your earliest
convenience.
Very truly yours,
|