JA fights Obama's proposed LIFO repeal

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JA fights Obama's proposed LIFO repeal

Association urges members, industry stakeholders, to contact legislators

April 02, 2009

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New York--Jewelers of America (JA) has begun an aggressive campaign to oppose a repeal of the last-in, first-out (LIFO) inventory accounting method that President Barack Obama has proposed in his fiscal year 2010 budget.

According to JA, jewelry businesses that use the LIFO inventory accounting method are able to record the sale of their most expensive inventory first, thereby decreasing profits and reducing taxes. By minimizing taxes, jewelers can also maximize after-tax cash flow, which is critical as industry businesses deal with a liquidity crisis and hard-to-obtain credit.

LIFO is also a useful accounting method when the costs of inventory are rising, as they are currently in the jewelry industry, JA states.

JA President and Chief Executive Officer Matthew A. Runci said that repealing LIFO now would negatively affect not only many retailers, but also jewelry manufacturers and diamond, gem and watch distributors.

"This repeal would be a potentially fatal blow to companies in the jewelry industry that use LIFO," Runci said in a media release issued on Wednesday.

To oppose the LIFO repeal, JA has joined and will serve on the steering committee for the LIFO Coalition, a Washington, D.C.-based partnership of associations and businesses that oppose LIFO repeal. The association is also leading the opposition within the jewelry trade, providing information and materials to assist American Gem Society, Jewelers Board of Trade and the Manufacturing Jewelers and Suppliers of America in fighting the repeal.

"We plan to add the jewelry industry's voices to others who are saying that now is not the moment to further harm companies struggling to recover from weak economic conditions," Runci said.

The campaign includes a two-pronged effort to eradicate the LIFO repeal threat. First, JA is urging trade members to contact legislators by e-mail, letter, phone or even in person, using a provided sample letter/talking points. A list of targeted legislators who serve on key budget and finance committees has been included in the outreach.

JA has also initiated its LIFO campaign push to coincide with the Congressional spring recess from April 6-17. With many legislators in their home districts during this period, the association is encouraging trade members to speak to their representatives directly, or at town halls and other live, local meetings. Contact details for every member of the House of Representatives and the Senate can be easily searched by going to USA.Gov/Contact/Elected.shtml.

The second component of the JA campaign involves fundraising. The association is asking members to donate funds to JAPAC, the Jewelers of America Political Action Committee, to help get the attention of legislators who serve on budget and finance committees. Under Federal Election Commission rules, however, only JA members can contribute to JAPAC. Thus, the association has developed a special, low-cost one-year membership offer to quickly sign up trade members who wish to support JAPAC.

To obtain JA's sample letter/talking points to oppose LIFO repeal and key legislators' contact information, industry members are urged to contact JA's public affairs department: Peggy Jo Donahue, director, pjdonahue@jewelers.org, (646) 658-5802; or Susan Thea Posnock, manager, sposnock@jewelers.org, (646) 658-5806.

To contribute to JAPAC, current JA members can visit: Jewelers.org/PublicAffairs/JAPAC.html for more information. Non-members should e-mail JA via Sharie Fogarty, assistant to the president and CEO, sfogarty@jewelers.org.

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