This month the Senate passed the postal reform bill S 1789 and the House of Representatives bill 2309 is currently being debated. It is in the best interest of all mailers that postal reform is passed. Many in Congress believe that raising rates on flats is the answer. Simple economics (2007 rate case) tells us if they raise the flat rates, mailers will reduce circulation. If rates remain the same or are reduced, mailers will mail and prospect more, creating more volume for the Post Office. One proposal by the Postal Regulatory Commission has rates increasing as much as 22%.
Midland Paper strongly supports postal reform and the long term benefits it would provide for our customers. Not surprisingly, postal reform is opposed by the postal unions and postal management.
Currently the Post Office is losing $25 million per day and they need to reduce their total cost by $22 billion by 2015. Currently, the Post Office has a no layoff policy and labor contributes to 80% of the total costs within the Post Office. Besides labor, excess capacity is a significant factor in the massive losses of the Post Office. They must reduce the overall cost of processing flats and first class mail and most believe they have plenty of capacity to do this while downsizing their overall operations.
Midland Paper would urge you to get in touch with your Members of Congress and let them know that postal reform is vital to your business, employees and suppliers.
Another major issue facing mailers is the 20-year-old law established in Quill v. North Dakota, which upheld remote sellers' rights to not have to collect sales or use taxes from customers residing in States in which the marketers have no physical presence. Currently Members of Congress want to overturn this law, which would force mailers to start collecting taxes from customers in more than 9,000 taxing jurisdictions.
If postal reform does not pass and/or Quill v. North Dakota is overturned the overall circulation of mailers will be greatly reduced.