Consumers who are eligible for federal tax rebates mostly intend to use the money to pay down debt, according to the findings from an International Council of Shopping Centers survey.
The survey found that 51 percent of consumers receiving a rebate intended to use it to pay off debt, which was up considerably from consumer intentions earlier in the year, according to the tax rebate study conducted by Opinion Research Corp between May 15 and 18. Of those taxpayers that have not already received the rebate, the percent of consumers intending to pay off debt was an even higher 55 percent. Moreover, households with income of $50,000 or less were more likely (61.5 percent) to earmark those rebates for debt reduction.
According to the survey, 27 percent of respondents will the refund to increase savings.
According to the U.S. Congressional Joint Committee on Taxation, the Economic Stimulus Act of 2008, which was signed into law in February, will refund $106.7 billion to individuals this fiscal year. The U.S. Treasury Department estimates that most checks will be paid by July 11. Through May 16, the Treasury paid out $40.8 billion to 45.463 million taxpayers. Nearly 40 percent of taxpayers received their rebate checks, ICSC said.
“Although the lion’s share of the rebate money will not be spent, the nearly 22 percent of the rebate that is likely to end up in the spending stream will still boost consumer spending by nearly $25 billion,” said Michael P. Niemira, Vice President, Director of Research and Chief Economist for the International Council of Shopping Centers.
With some retailers offering consumer incentives to spend the rebate money, consumers reported that retailer incentives tied to grocery items would most likely (52%) cause them to take advantage of those promotions, according to the survey. The second most attractive (42%) use of rebate money was on retailer incentives tied to energy efficiency products for the home.