Sales Tax Holiday Proposal Could Be Rescheduled

Support continues in Washington, D.C., for a proposed sales tax holiday, according to proponents. However, if passed, the initiative is likely to launch in mid-February, to help lift retail sales around the Presidents' Day holidays.

Kevin Bishop, a spokesperson for Representative Lindsey Graham (R-SC), who has sponsored legislation in the House of Representatives for a sales tax holiday, told BTW that while the House bill was currently "in a holding pattern" there was a chance that a similar bill in the Senate could be passed as part of a national economic stimulus package. However, there has been a good deal of debate regarding that package, and Bishop noted that it was difficult to predict how soon that measure might be sent to the president for his signature.

Under the plan, there would be a suspension of sales tax collection in participating states for a 10-day period. Participation is not mandatory and would be up to each state legislature and governor. All tangible personal property would be covered, including such big-ticket items as automobiles, but not alcohol or tobacco. Groceries would be covered, but not restaurant meals. Congress would reimburse the states and localities for the lost sales tax revenue.

The initiative was first proposed by the National Retail Federation (NRF) to stimulate the national economy, and ABA continues to support the plan as a viable way to offer across the board assistance to the retail sector and the economy as a whole.

Chad Davis, a legislative associate with NRF, said that supporters of the proposal are looking at the mid-February period as "the best time to do it now," noting that a 2002 kickoff "would make it easier for the states" to take steps to participate. He noted that the House bill had received bipartisan support in a hearing before the House Small Business Committee on November 15.

Committee Chair Don Manzullo (R-IL) commented after the hearing that the sales tax holiday "would offer an immediate benefit. It would effectively lower prices to make products more affordable for consumers while spurring more business for struggling retailers. Everybody wins."

-Dan Cullen