Sales Tax Holiday Bills Introduced in Congress

Legislation calling for a nationwide “sales tax holiday” has been introduced in both Houses of Congress. The Senate bill was introduced on Nov. 7, and that of the House of Representatives on Oct. 25.

If approved, the legislation would eliminate sales tax for the week following Thanksgiving. That could save consumers as much as $6.5 billion to use and spend and give a needed jolt to the economy, say its sponsors.

“This bill is a first installment in a recovery plan for our nation’s sagging economy,” said Tracy Mullin, president and chief executive office of the National Rretail Federation. “The `sales tax holiday’ is the only proposal that gives the economy the immediate shot in the arm it needs right now. The `sales tax holiday’ should be adopted without delay.”

However, the tax holiday would not be mandatory. Participation would be up to each state legislature and governor.

“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,” Mullin said. “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.”

The Senate bill-called the Sales Tax Holiday Act of 2001-was developed in cooperation with the NRF, which has led a multi-industry coalition of companies and trade associations that support the proposal. NRF first proposed a sales tax holiday in an October 4 letter to President Bush.

The NRF is the world’s largest retail trade association, representing more than 1.4 million members with more than 20 million employees, and annual sales of $3.4 trillion. The group has worked closely with White House staff, key members of the House and Senate, and governors and state legislators from across the nation to build support for the program.

The Senate bill was introduced by Senators Patty Murray (D-Wash.), Olympia Snowe (R-Maine), Joseph Lieberman (D-Conn.), and Rick Santorum (R-Pa.). It is similar to H.R. 3172, introduced in the House October 25 by Rep. Lindsey O. Graham (R-S.C.) and Rod R. Blagojevich (D-Ill.).

Under the legislation, if passed:

* States and localities that collect sales tax would temporarily stop collecting the tax from Nov. 23-the day-after-Thanksgiving “Black Friday” kickoff of the holiday shopping season-through Dec. 2. All tangible personal property would be included except for alcoholic beverages, tobacco products, and groceries.

* Congress would reimburse the states and localities for sales tax revenue lost during this period. Local jurisdictions that collect sales tax would be reimbursed via the states.