Shoppers in ten states and the District of Columbia flocked to stores and malls last weekend to take advantage of “sales tax holidays” timed to benefit back-to-school-shoppers. Two more states, Connecticut and Maryland, have scheduled sales tax holidays during the third week of August. In most states, the tax holiday applies to moderately priced clothes, school supplies and in some states, to computers. But Florida has a sales tax holiday in May for hurricane supplies, in July for back-to-school clothes and computers, and in October for energy-efficient appliances, the Associated Press reports.
The State Revenue Department in Alabama estimated that consumers saved $3 million on state sales taxes and another $3 million on city and county taxes during the state’s first sales tax holiday, nbc13.com says.
Members of the Alabama Retail Association reported huge sales gains from the weekend, ranging from 25 to 300 percent over last year, Nancy Dennis, spokesperson for the association, told the Birmingham Business Journal. The best reports came from stores that specialize in the kind of merchandise eligible for the three-day moratorium on taxes, Dennis said. Best Buy, for example, reported a high demand for computers.
Merchants in Tennessee said the state’s first holiday was a big success for them and for their customers but sales volumes didn’t reach the heights of the Christmas season. “It didn’t quite meet those kinds of volumes but certainly bigger than any normal promotional event we might do,” said Nelson Kirk, manager of Kohl’s, according to WDEF-TV News 12.
Franco Ambrogi, co-owner of Franco’s Fine Clothiers in Richmond, Virginia, said sales at his stores were below expectation. “They looked pretty good but not fantastic,” he said, according to a Richmond Times-Dispatch report. Sales of boys and girls clothing at area Wal-Mart stores, however, rose more than 200 percent over the weekend, said Jeff Kraus, manager of Wal-Mart’s Richmond area stores. “There were higher increases in rural stores than we had in the metro stores.”
Texas comptroller Carole Keeton Strayhorn estimated that Texans would save more than $49 million on purchases eligible for the sales tax holiday. Consumers in Texas have saved a total of $287 million in sales tax from the state’s previous seven holidays.
Tennessee’ sales tax break was approved by the state legislature in 2005, the AP reports, but was delayed for a year until the state, which relies heavily on sales taxes, could absorb the loss of $10 million in revenue. The state will restore lost sales tax revenue to local governments – an estimated $2 million of the total.
Consumers may benefit from more than the actual savings, according to Verenda Smith, spokeswoman for the Federation of Tax Administrators, who sees a psychological element at work, the AP says. “People respond to a sale, and this is a government sale.”
The idea of “not paying sales tax,” appeals to people," said Craig Shearman, a spokesman for the National Retail Federation. “Americans have hated paying taxes all the way back to the Boston Tea Party.”