Limiting the commercial addition to food What have we actually capped?

Conf. univ. dr. Băluță Aurelian Virgil

Great joy for Romanians: the commercial addition to basic foods has been capped for a limited period of time. Through this article, I try to understand more exactly what was capped in reality.
The commercial surplus is not, as some may think, a net gain of those who sell to consumers what others produce. The commercial surcharge is a price for a category of commercial services that specialized firms provide for us, the consumers. If we could go directly to the manufacturer and buy the goods from his premises, at least for certain products, we would not be able to buy at the production price level either.
What does the commercial add-on actually include?
The commercial allowance includes all the costs that traders incur in order to receive the products from the manufacturers, to receive them to conform to our requirements, the consumers, to arrange them on the shelves, to ensure the necessary temperature for their conservation until sale , to always check the quality and expiration date, to manage the stocks on the shelf so that nothing is missing that we, the consumers, want, to organize the flow of buyers, to manage receipts and make payments to suppliers, to ensure security and safety commercial premises, to provide documents to control bodies, etc.
Considering the list of activities that are included in commercial services, we deduce the list of costs that must be covered by stores that sell products, mainly food. First there will be costs with the staff employed, such as salespeople, staff who take the goods to the shelf, reception staff, staff who check the expiration dates and quality of the products, security, air conditioning, maintenance of facilities regarding temperature, lighting, etc. Administrative staff costs are added to operative staff costs: human resources, accounting, occupational health and safety, management, etc. The periods in which the staff work, as well as rest or part of medical leave, are paid. There are also costs for the store’s utilities (light, water, gas, etc.). The generous spaces in which we move in stores presuppose high consumption of utilities. Specialized services will be required such as fixed and mobile telephony, the Internet, the transport of values above a certain ceiling (cash received from sales), certification of certain equipment, marketing and promotion, etc. Depreciation or rent of the building in which the store operates is another cost component. To these is added the depreciation of equipment and installations that are mandatory in a store. We have not completed the list: there is still interest on the loans contracted for the launch of the businesses and for their development. In the optimistic version, a store covers its operating costs after one year. The credit covers both the initial costs prior to the start of the store, the losses from the first year of activity, the gap between the payment date of the suppliers (usually when taking over the products or immediately after their reception) and the date when we decide to buy them. There are also local taxes, such as those for the cars that transport the products or for the advertisement in front of the store. Even if for the vast majority of products we are convinced that the selling price to the customer is much higher than the one paid to the manufacturer, we have to accept that there are also products for which the trader gets less money than he paid to the manufacturer, thus increasing the costs mentioned above . Depreciation may occur during transport, storage, more or less intentional errors by customers that damage the original packaging, exceeding the warranty period, changing tastes specific to a certain season, products intended for certain events or holidays remain in stock after they they passed, etc. All these added together form the costs of commercial services, money that the store owners collect but do not put in their own pockets.

Gross trade surplus is the difference between the total amount of sales prices to customers and the sum of prices paid to producers. After deducting from the gross commercial addition the costs of commercial services mentioned above, the store owners determine the gross profit of the store’s activity. They won’t be able to take home all the profit. First they have to pay the 16% profit tax. But it does not apply to the profit calculated above. The tax office in Romania, as in other countries, makes you pay tax on a usually higher profit, calculated according to rigid tax rules. What remains after paying the profit tax is called net profit. It can be taken home by the employer in the form of a net dividend after paying a dividend tax on it. If urgent investments are needed, those amounts will also be taken from the net profit.
Instead of conclusions: what was actually capped?
From the above it follows that we have capped the salaries of employees, the value of utilities for stores, the price of other necessary services, the rent of the space where the store is located, the interest on loans, taxes to the state budget, the amounts needed for investments in the store, the dividends of the owners.
A few questions for readers:
-will the holders of the amounts mentioned above, which are not intended for the shop owner, agree to the ceiling?
– will consumers benefit from this ceiling?
-is there a risk of the lack of products with capped commercial additions from the stores?
We will be grateful to read and post your most original answers.


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