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Safeway says ‘believe us,’ Seattle employee tax will impact customers

SEATTLE -- One of Seattle’s main grocers, Safeway, says the city’s proposed “progressive tax on business,” also known as the “employee tax” or “head tax,” will impact customers.

That’s why Safeway is asking for a grocers exemption. If they don’t get it the chain tells Q13 News, they will have to do one of two things: close store or raise prices.

“We’re coming out strongly because we do feel like there’s a lot of unintended consequences of this tax,” said Sara Osborne, Safeway public affairs director.

The city of Seattle announced the proposed tax last Friday. The proposal would tax the city’s 585 largest businesses $.26 per employee per hour worked, or about $540 per employee per year. Its goal is to raise money to address the homeless crisis. It would generate an estimated $75 million a year.

It’s been billed as a tax on the rich, only levied on business with revenue of $20 million or more annually. But Safeway contends that the tax would end up hurting the city’s poorest families.

Currently, there are 19 Safeway stores and two Alberstons in the Seattle city limits. Albertsons is the parent company of Safeway.

In two communities, Rainier Beach and Othello, it is the only mainstream store in the area.

Chelle Jackson is the store director at the Rainier Beach Safeway.

“I grew up about five blocks up the street from here,” said Jackson. “It’s the only store that’s survived the generations around here."

But with the tax, this store may close. It’s not a certainty, but Osborne tells Q13 News the company has to look at their options.

“It’s not about our company being in bad shape, it’s about losing stores in communities in Seattle who need them,” said Osborne.

On paper, Osborne confirms Safeway's Seattle stores bring more than over $20 million in revenue each year. But after expenses, Safeway says its Seattle locations end up with a small profit.

“The margins grocers operate within, they’re very, very small, almost razor thin,” said Osborne.

If grocers aren’t exempted, and Safeway decides not to close stores, Osborne said the other option Safeway has is to raise prices. Jackson said that would be devastating to her customers.

“It would mean they couldn’t get all the things they want on their shopping list, or they would have to cut back, and it might mean that kids don’t get to take lunch to school,” said Jackson.

Osborne said Safeway has repeatedly reached out to the city of Seattle. Osborne has publicly testified twice in front of council members about the company’s concerns with the tax. But so far, Osborne says, not one elected official has opened a dialogue.

Safeway said if the council wants proof, they’ll gladly share their slim margins behind closed doors.

“We’re happy to share those numbers so the council members can see how close we are in some communities to it not being worthwhile in some communities to operate,” said Osborne. “We want them to believe us.”

Safeway wants to make it clear they believe building affordable housing and addressing the homeless crisis is an important cause they support, but in their opinion this tax isn’t the way to go.

“What we’re trying to point out is that we are addressing an affordability crisis, but we can’t address that by making food less affordable,” said Osborne.

Q13 News reached out to the Seattle City Council for comment, but spokesperson Dana Robinson Slote said she could not provide that by news time.

Council member Kshama Sawant has directed comments at Safeway in the past. Last week, at a business roundtable discussion about the new tax, she said Albertsons is “not a struggling business.”

But as the Seattle Business Magazine first pointed out, according to the company’s annual report, while the company reported nearly $60 billion in revenue in 2017, they made only $46 million in profit.

In a statement provided to Q13 News Friday afternoon, Fred Meyer, which also owns QFC, also came out against the tax: “Our greatest asset is our associates and we object to an additional tax that will inhibit our ability to add new jobs and be a sustaining employer of the future. This is an easy yet unfair way to find additional revenue — even for the worthy public policy goal of housing availability — and would come at the cost of growth.”

PCC Community Markets, as well as the Northwest Grocers, which represents smaller markets in Seattle, declined to comment on the new tax.