New Jersey lawmaker introduces legislation to give tax incentives for small grocers

A New Jersey U.S. house representative introduced legislation Wednesday to lower grocery food costs.

The REDUCE Food Prices Act, from Rep. Mikie Sherrill (D-NJ), is intended to expand competition in the supermarket and grocery industries, which in turn would lower the cost for food. If passed, the measure would give tax incentives for small grocers to start businesses, hire workers, and increase competition in areas with high corporate consolidation.

“All across the Garden State, I’ve heard from families who have struggled to keep up with rising prices at the grocery store, making it harder to put food on the table and make ends meet,” said Sherrill. “That’s why I’m taking action by introducing the REDUCE Food Prices Act, which will increase competition, expand tax credits for small grocery stores to open their doors, and drive down prices for families.”

Price gouging and shrinkflation are two other issues Sherill said she’s targeting with the proposed legislation.

As the election draws closer, politicians continue to hammer on grocery prices, which are front and center in terms of consumer pain points.

In early October, Sen. Elizabeth Warren (D-Mass) sent a letter to Ahold Delhaize CEO Frans Muller requesting pricing and other information from Stop & Shop, which is owned by Ahold Delhaize.

The REDUCE Food Prices Act is one of a series from various states looking to combat what they claim is price gouging. 

Back in April, Connecticut Attorney General William Tong launched an inquiry into grocery price gouging in response to a Federal Trade Commission report accusing large grocery chains of the practice. The Connecticut state Senate was also expected to introduce Senate Bill 3, which would give the state’s attorney general additional powers against price gouging.

The FTC additionally launched an inquiry into high grocery prices in August.

Grocery price inflation in September was the highest since January, according to the latest Consumer Price Index released last week. Also, for the first time in over a year inflation rose higher at the grocery store than at restaurants.

Sherrill’s measure would provide tax incentives for the establishment and operation of small food retail businesses in areas with high food retail concentration and low levels of competition. Specifically, it would create and expand tax incentives for small businesses in the food retail industry that operate in counties where the Herfindahl-Hirschman Index, a measure of industry consolidation by the Economic Research Service of the U.S. Department of Agriculture, is at or above 1.400, indicating that there is a moderate to high market concentration in that county’s retail food sector.

The legislation also increases the Rehabilitation Tax Credit for investments in the restoration and re-use of historic buildings, the Work Opportunity Tax Credit for the hiring and employment of certain workers, Bonus Depreciation for the purchase of certain investments in new or upgraded equipment or property, and the Qualified Business Income Deduction for certain businesses’ pass-through income.

The bill creates a New Food Retail Business Tax Credit equal to 15% of a small food retailer’s capital investment in its first three years of operation.