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US Retailers Unlikely To See Tax Holiday Before Christmas

by Mike Godfrey, Tax-News.com, Washington

19 November 2001

House Small Business Committee chairman, Don Manzullo (R - Ill.), has revealed that retailers calling for a national sales tax holiday in time for Christmas are likely to be disappointed and may have to wait as long as February before their demand is granted.

Earlier in November the world's largest retail trade association, the National Retail Federation (NRF) announced its support for US sales tax holiday legislation to boost consumer spending and help restore the nation's sagging economy.

The proposed legislation would allow states to give their residents a 10-day break from paying state and local sales taxes on their purchases to encourage more spending this holiday season. Participating states would be reimbursed for their sales tax losses by the federal government

The NRF claimed that the measure would save consumers as much as $6.5 billion in taxes representing $100 billion in spending during the 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.'

Manzullo is greatly in favour of the tax break saying it would provide tremendous benefits for consumers and small employers this holiday season and has urged that it should be part of any economic stimulus legislation that comes out of Congress this year.

But the committee came to its conclusion during last Thursday's meeting when it became clear that there was insufficient time in which to draw up, approve and enact the legislation. Manzullo said he intended to call upon committee member, Patrick Toomey, (R - Pa.), to convene a meeting with all interested parties, including governors, to come to some sort of agreement.

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