Retailers Say Sales Tax Holiday Will Boost US Economy

by Leroy Baker, Tax-News.com, Washington

05 November 2001

The world's largest retail trade association, the National Retail Federation (NRF) is backing a US sales tax holiday legislation proposed last week by Senators Patty Murray, D-Wash.; Olympia Snowe, R-Maine; Joseph Lieberman, D-Conn.; and Rick Santorum, R-Pa. The Federation is strongly urging the government to take note because, it argues, a sales tax holiday will boost consumer spending and help restore the nation's sagging economy.

It claims that the measure would save consumers as much as $6.5 billion in taxes representing $100 billion in spending during a 10-day period. 'Consumer spending is two-thirds of the gross domestic product and NRF believes the fastest and strongest means to recovery is to boost consumer spending,' said President and CEO Tracy Mullin . 'This legislation puts money in the hands of consumers in a way that requires that they spend money to save money — guaranteeing that these funds will be pumped into the economy.'

She added: 'This bill offers economic stimulus that meets the criteria handed down by the White House — it is both immediate and temporary. It will give our economy a boost when it needs it most — right now, not years from now. It gives consumers extra cash during the busiest shopping season of the year and makes for happier holidays. But it won’t become a permanent federal program that goes on costing taxpayers billions after the need is gone.'

The NRF advised in the development of the Murray bill, the Sales Tax Holiday Act of 2001, which includes the following measures:

• States and localities that collect a sales tax would temporarily stop collecting the tax from November 23 - the day-after-Thanksgiving 'Black Friday' kickoff of the holiday shopping season - through December 2. All tangible personal property, including big-ticket items such as automobiles, would be included, but not food, alcoholic beverages or tobacco products.
• Congress would reimburse the states and localities for sales tax revenue lost during this period, estimated by NRF at $6.5 billion if all 45 states that collect sales tax participate. Local jurisdictions that collect sales tax would be reimbursed via the states. With sales taxes averaging 6-8 percent, the $6.5 billion figure represents roughly $100 billion in sales.
• The sales tax holiday would not be mandatory. Participation would be up to each state legislature and governor.

'A sales tax holiday helps more than just retailers,' concluded Ms Mullin. 'Everyone who has a part in getting a product on shelves benefits, from suppliers of raw materials, to manufacturers and distributors to the truck drivers who deliver products to the stores. Almost every sector of the economy stands to gain from a sales tax holiday.'

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