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State residents get a sales tax reprieve
Maryland tax holiday set for Aug. 8 - 14
Friday, Aug. 6, 2010
 Click here to enlarge this photo Staff photo by DARWIN WEIGEL
Barbara Mulhern, left, of Huntingtown looks at clothing for purchase last Thursday with Shoppe for Hospice volunteer Kim Zabiegalski. The Huntingtown clothing shop for women and children is celebrating its one-year anniversary. The proceeds from the shop benefit Calvert Hospice.
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For years, parents in Washington, D.C., were used to buying back-to-school clothes for their kids during early August, when the city had a sales tax holiday to relieve the financial burden on consumers. The measure was repealed last year, but Maryland has picked up the slack.
Next week — Aug. 8 through 14 — back-to-school shoppers and everyone else will be able to pick up some necessities without paying the state's 6 percent sales tax. The exemption applies to most clothing and pairs of shoes costing less than $100, except for items like work safety equipment or sports clothes not normally worn on the street. The event, established by legislation in 2007, will occur every year from now on.
Maryland Comptroller Peter Franchot (D) will visit St. Charles Towne Center mall in Waldorf on Friday morning to promote the event in Charles County, one stop out of five all over the state to encourage consumers to spend dollars the following week. While the economy still is struggling, Franchot said in an interview that he expects the lower prices to lure shoppers out. During a tax holiday in 2001, there was a 10 percent increase in sales in the affected categories. There was another holiday in 2006, he said.
"Yes, I think we'll see a jump in retail sales … because of the visibility of the issue and related publicity I believe will encourage families to shop, especially during that week, and everyone benefits from lower prices, more sales and a boost to the local economy," Franchot said. Despite the tax hit to the government — the state sacrificed about $5 million during the 2001 holiday — the measure is good for everyone because "it comes back to us because [the money] is recycled through the economy very quickly," he said.
Mall spokeswoman Kris Winternitz thanked Franchot for choosing that venue to promote the week, and said she expects a rush of shoppers, based on what she saw during previous sales tax exemption events. She said she was glad the holiday would last a whole week and will be an annual occurrence.
"The last one we had was just a weekend, and we did see an increase in sales in just a few days. Unfortunately the state of Maryland hasn't been doing it for a while," Winternitz said.
Judy White, store manager of the Belk department store in California, said she expects the holiday to bring shoppers in the door, and that the store will be offering other discounts as enticements.
"I think the impact will be very favorable, and in other states I've worked in, it's always been a very good thing, with a lot of extra sales generated in that period" without sales tax, she said.
Because the exemption applies to used goods as well as new, Hug Bug Children's Boutique owner Lisa Veon is expecting a crush of customers, especially since she's been telling everyone who comes in to return to the consignment store during the holiday.
"A lot of people are smart enough to be frugal about back-to-school shopping these days," she said.
Ann Kaine, volunteer manager of Shoppe for Hospice, a charity thrift store in Huntingtown, said she doesn't know if it would boost sales. She learned of the measure from a visitor and said that, as the store celebrated its one-year anniversary July 29, she didn't have the retail experience to predict how shoppers might react.
"Well, hopefully it will bring in more customers for our shop. One hundred percent of our proceeds will go to the Burnett[-Calvert] House for hospice. Everyone who works there is a volunteer and the entire shop got put together by volunteers throughout the community. Hopefully it will be another opportunity for people to come out and support the store," Kaine said.
Candice Quinn Kelly, owner of Candy Clark Boutique in La Plata, said she doesn't anticipate the tax holiday will drive much traffic to specialty stores like hers but that mass retailers, where customers are likely to make several purchases at once, could look to it to bring people in the door.
"For retail, we're a small kind of specialty boutique. People come in because they love Vera Bradley or they're looking for something a little unique. I think the stores that will really do well are where you can go for back-to-school supplies. It will be a help to them and to parents who need to get their kids back to school, and that's the benefit I see to this kind of thing," she said.
The holiday isn't likely to affect Educate & Celebrate, either, said Laurie Uherek, who owns the two school supplies stores in Prince Frederick and Waldorf, because her wares aren't included in the discount. With luck, though, cheaper clothes will mean consumers have more left over in budgets for notebooks and pencil cases, she said, adding that she hopes the legislature will consider including school supplies in the future.
"I think it's great but I wish they would extend it to school supplies. … It's a shame they don't extend it to [other] essential needs people have," she said.
The 6 percent sales tax drives business out of state, especially to Pennsylvania and Delaware, neither of which imposes a tax on clothing, said Pat Donoho, president of the Maryland Retailers Association. The tax holiday might encourage state residents to spend their money closer to home.
Donoho heralded the advent of "seller's privilege," which allows retailers in excluded categories to opt to pay the sales tax on customers' behalf in order to participate.
"I sure hope so. I hope folks would take advantage of this," he said.
To buy or not to buy
A sampling of tax-exempt and taxable products during Shop Maryland Week, some you might not expect:
Exempt
Adult diapers
Antique clothing
Bowling shoes, sold (not rented)
Bowling shirts
Corsets and corset lace
Dress shoes
Dresses
Flip-flops
Fur coats and stoles
Garters and garter belts
Graduation caps and gowns
Gym suits and uniforms
Hooded shirts and sweatshirts
Jackets
Jeans
Jerseys
Lingerie
Prom dresses
Raincoats, rain hats and ponchos
Shirts
Taxable
Aprons
Baby bibs
Bobby pins
Cloth and lace,
knitting yarns and other fabrics
Diaper bags
Earrings
Fishing boots
Garment bags
Goggles, except prescription
Hair bows, clips and bands
Heelys (wheeled tennis shoes)
Ice skates
Inline skates
Jewelry
Life jackets and vests
Monogramming services
Receiving blankets
Scuba gear
Shower caps
Wigs, toupees and hairpieces
Go to www.comp.state.md.us/shopmd/List-of-Taxable-Exempt-Items.pdf for the complete list.
Source: Maryland Comptroller's website
