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Shoppers, this holiday is for you
By MARK ALBRIGHT
© St. Petersburg Times,
Lawmakers once again changed the rules of the popular four-year-old program. The tax-free status now applies to items priced $50 or less, down from $100 in previous years. The tax break also has been extended to include a variety of school supplies priced at $10 or less. The tax savings is 6 to 7 percent of the purchase price, depending on each county's rate. On a $300 back-to-school budget, for instance, that's about a $20 savings. Claiming they faced a tight budget, lawmakers debated last spring whether to shorten the holiday to one weekend or cut it entirely. Instead, they chopped the $100 per item threshold in half, making fewer items tax free. By tinkering with the tax break formula, officials estimate state and local governments will give up $30.1-million of the $17.7-billion collected in annual sales taxes. That's down from the $41.2-million given up during the 2000 tax holiday. Retailers, slogging through one of their most difficult summers in years, welcome any incentive for shoppers to spend. "It hasn't been pretty out there," said Conrad Szymanski, president of 64-store Beall's Department Stores. That chain expects to generate twice its usual weekly sales volume during the sales tax holiday. "Nothing thrills taxpayers like saving taxes." "It's going to be a big deal," said Tom Locke, general manager of University Mall in Tampa. The slow economy prompted retailers to flood the market with 30 and 40 percent discounts. "This summer, retailers began taking their July (price) markdowns in June," Locke said. Most big retailers are promoting the sales tax holiday in their advertising. But whether consumers can be prodded to open their wallets wider is another matter. Unemployment is up in Florida thanks to corporate cost cutting. Wall Street is jittery. Yet consumer confidence continued to rise in July, according to figures that will be released next week by the University of Florida's Bureau of Economic and Business Research. Economists cite several reasons for optimism. The Federal Reserve is considering cutting interest rates for a seventh time to stimulate consumer spending. Many taxpayers received notices last week from the IRS telling them to expect federal tax rebates of $300 and up within three months. Even though consumer debt remains high, shoppers have been willing to spring for big ticket purchases such as cars if the price is right. "People still think it's a good time to buy, so I suspect they will be out in droves," said Chris McCarty, the economist who tracks consumer confidence for the bureau. "But they are looking for deals and deep discounts." While any consumer can take advantage of the tax holiday, legislators tried to focus on residents, not tourists. The tax-free status does not apply in shops inside hotels, airports or theme parks. Exemptions are based on the price of each item, so there is no limit on how much a consumer can spend. A $50 shirt is tax-free. A $50.01 shirt is taxed on the full amount. The rules are riddled with head-scratchers. Lawmakers tailored them to benefit back-to-school buying. So they tried to draw the line between apparel worn to school versus sporting goods. As a result, fishing vests that don't have flotation and football jerseys are tax exempt, but football pads and fishing wader boots are taxable. Legislators also tried to separate school supplies from luggage. So book bags are tax-free, but duffel bags are not. The Legislature's decision to exempt school supplies priced at less than $10 added more confusing distinctions. Masking tape is taxed, but cellophane tape is tax-free. - Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.
 © 2006 • All Rights Reserved • St. Petersburg Times
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From the Times state desk
From the state wire
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