Opinions differ on proposed tax holidays
Local business leaders say there are pros and consBy Patrick Cooley, pcooley@mariettatimes.com
Local business owners and leaders are divided about whether proposed national sales tax holidays would have a positive effect on the local economy.
The National Retail Federation asked President-elect Barack Obama in December to include several sales tax holidays during times of the year when consumer spending is the highest as part of his proposed economic stimulus package.
Teresa Turner, president of the Belpre Area Chamber of Commerce, said there is evidence such a move would lead to more purchases.
"On a personal level, we know a lot of people who shop in Ohio because of the food tax in West Virginia," she said. "So I can certainly see it making an impact during that time frame. If you spend $200 (and don't have to pay the sales tax), you can save $12 to $13."
Turner said consumers have to consider what the sales tax is used for and whether they think a reduction in those services is worth the trade-off.
"There are pros and cons," she said. "As an individual, you would be saving some money, but it would hurt on a tax level."
The National Retail Federation wrote a letter to Obama during the height of the holiday season urging him to act on the issue. The letter is posted on the group's Web site.
"We urge you to act quickly on legislation to help stimulate consumer spending as one of the first priorities of your new administration," the letter states. "To be effective, any fiscal stimulus package must be enacted with great speed. It must be substantial. And it must be sustained. To accomplish this, the plan must include a longer-term investment designed to produce sustained economic growth through job creation as well as short-term economic stimulus aimed at increasing consumer spending."
The letter cites information from the U.S. Census Bureau, which says that state sales taxes, ranging from 2.9 percent to 7.25 percent across the country, cost consumers $236 billion a year.
The letter also asks Obama to put money into infrastructure projects such as roads and bridges and public transportation, saying those are also critical to economic growth.
The National Retail Federation's Web site says the group is the largest retail federation in the world, representing businesses of all kinds.
Greg Delemeester, an economics professor at Marietta College, said he didn't see much benefit to a sales tax holiday.
"Any economic stimulus should focus on the long term," he said, stating that such a holiday would do more to create short-term spending.
"I think one thing we want to do is get Americans to save more and be more judicious in their spending and not go further in debt," Delemeester said, referring to the current nationwide credit crisis.
He said a better idea might be income tax cuts, which would create incentives for people to work and for businesses to hire workers.
Dan Moore, owner of Belpre Hardware, said a sales tax holiday could help, but wouldn't be enough.
"We need more than that," he said.
Diann Rock, owner of the Rock Box in Beverly, disagreed.
"I think it would be a great idea," she said. "It would get people to spend more money."
Marietta residents were divided on the issue.
"It would be nice to have around the holidays," said Eric Smith, 29, of Marietta.
"It doesn't seem like it's enough," said Susan Cooper, 41, of Marietta.
The Associated Press has reported on several versions of the economic stimulus package Obama plans to present to Congress soon after his term begins. So far none of them have included a sales tax holiday.
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Finallap
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01-05-09 11:07 PM
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They want to have these tax holidays in March,july and october..It will last 10 days each..The feds will then reimburese the sates
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neanderthal286
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01-05-09 1:26 PM
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Maybe I am an idiot, but I was unaware that the federal guvmint taxed sales. I always thought that was a state tax. They have tons of taxes on products such as cigs and gas and anything else that they think that they can get away with, but a straight up sales tax has so far eluded them. I support the fair tax proposal which would do away with all other federal taxes and implement an across the board sales tax of 23 per cent on new item sales. I digress, the president is not in a position to give sales tax holidays, but the governor is.
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