MA Budget Amendments Would Place Harmful Price Controls on Businesses

Dear Senate President Spilka, Majority Leader Creem, and Members of the Massachusetts Senate:

On behalf of National Taxpayers Union (NTU), the nation's oldest taxpayer advocacy organization, we are here to express our opposition to proposed budget amendments 115 and 135. The proposed amendments to subsection (b) of section 98 of chapter 358, would extend the period of time that delivery price controls remain in effect. Despite the initial well-meaning economic intent of implementing delivery price caps during the height of the COVID-19 pandemic, city residents and taxpayers will not be well-served should either of these amendments be included in the final budget bill.

As efforts continue nationwide to ease the financial impacts from COVID-19, state and local governments must ensure policy changes, particularly those made permanent, will not do more harm than good or create negative long-term unintended economic consequences. Unfortunately, continuing to implement price controls for food delivery services will decrease consumer volume causing an adverse impact on small businesses. Unending arbitrary price caps will result in fewer delivery drivers, condensed delivery territories, less access to goods, a reduction in restaurant delivery patrons, and reduced opportunities for delivery workers.

In reality, fee caps function as government-mandated price control, forcing businesses to pass on the cost of providing a service to the consumer or onto employees. For example, in Portland, UberEats has now included a three-dollar delivery fee in response to a 10 percent fee cap. In Chicago, DoorDash imposed a dollar-fifty “Chicago Fee´ to each order after the City Council capped restaurant commissions at 15 percent. Following enactment of delivery price caps in Massachusetts, DoorDash added a two-dollar delivery surcharge. Overwhelming evidence suggests these policies have unintended consequences, yet states such as Massachusetts, continue to propose caps on delivery prices. We urge the Massachusetts State Senate to resist extending this detrimental economic policy. Restaurants are struggling following the restrictions imposed as a result of the pandemic, the last thing needed are price controls that will distort the market, increase costs to consumers and harm the very businesses state officials are attempting to protect.

Meal delivery has become essential to the livelihood of restaurants, and, as a result, delivery services have become a necessity for restaurants to remain solvent during difficult times. Given delivery rates are contractually agreed upon by both the delivery service and the restaurant, it would be wise for Massachusetts to lift the current price controls, leaving this policy matter in the hands of the private sector. We hope you will stand with small businesses and oppose extending the time period these caps remain in effect. Thank you for your time and consideration of NTU's comments, please reach out should you have any questions.

Leah Vukmir, Vice President of State Affairs
Jessica Ward, Director of State Affairs