The National Retail Federation (NRF) asked President-elect Barack Obama to include several sales tax holidays in his economic stimulus legislation.
“Retailers’ considerable experience with sales tax holidays has shown that they provide a substantial inducement for people to shop,” the organization wrote to Obama. “To this end, we suggest a series of three national sales tax holidays that would cover a very broad range of goods.”
The NRF’s membership includes retailers that use all sales channels, including catalogs and the Internet.
An NRF survey conducted when a national sales tax holiday was considered in 2001 found 82% of consumers favored a tax holiday, 83% would take advantage by making purchases, and 69% would make purchases they otherwise would not have made. The NRF did not provide updated figures that reflect current economic conditions.
The NRF proposed that tax holidays be held during March, July and October 2009, each lasting 10 days and including two weekends. Tax-free treatment would apply to all tangible goods subject to a state sales tax ranging from apparel and home furnishings to restaurant dining and automobiles but would exclude tobacco and alcohol.
Under the NRF’s proposal, the federal government would reimburse the 45 states that have sales taxes for the lost revenue, and would provide the five states without a sales tax (Alaska, Delaware, Montana, New Hampshire and Oregon) with revenue approximating the sales tax reimbursement that would be received by states with similar population.
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