November 1, 2019
This letter is to announce a price increase in our service rates. We strive to work as efficiently as possible and to keep our overhead costs low. In spite of these efforts our costs continue to rise. Labor, health insurance, auto insurance, property insurance, and state taxes have all increased year after year despite our low incident levels. The rates are outlined on our website in each area of service. If you had a contract with us we will of course honor the prices that were agreed upon. Please feel free to contact us with any questions or provide us with any feedback you have.
One of the major factors was the recent adoption of a new State of Oregon tax signed into law by Kate Brown and the Oregon legislature. This tax is a type of sales tax. The funds are supposed to go to education. While we are supporters for spending tax dollars on education we are not a supporters of the way this particular tax was enacted or the ramifications of it. This is a tax on Gross sales, for anything sold in Oregon. There are several issues with this type of tax. First it is a sales tax, and the people of the state of Oregon have voted “no” on a sales tax at least 9 times. Second it is a tax on the businesses gross sales. So lower margin businesses with high cash flow are paying a higher portion of their profits to this tax. For example if we sell a generator to our customer for $300,000, typically the cost of that generator could be about $280,000. So our net profit is $20,000, but we will pay the taxes on $300,000 of income. Third is this tax pyramids. Meaning that each time the same goods change hands the tax will be charged. For example, if a company makes a part in Oregon and sells it to a wholesaler in Oregon – there is a tax on that, if that part then gets sold to a retailer in Oregon – there is a tax on that, if the retailer sells it to the end customer in Oregon –there is a tax on that. Essentially the same item has been taxed 3 times. This can have a significant effect of pricing and how companies have to price their end products to the consumer in order to cover the overhead of this tax.
Hope Kramer Chief Financial Officer Power Systems Plus, Inc.