Maryland and Virginia Holding Tax Free Holidays

WASHINGTON - $606 is what the National Retail Federation estimates an average family will spend on back-to-school merchandise. So, every little bit of savings, counts.

This year, Maryland is joining Virginia and 14 other states in allowing shoppers to buy their supplies tax free.

Maryland Comptroller Peter Franchot says it is good policy.

"This is a little stimulus program for Maryland consumers," said Franchot.

Virginia's tax holiday is from August 6 to 8. School supplies less than $20 per item, and clothing and shoes less than $100 per item are exempt.

Maryland's tax holiday is the week of August 8-14. It only covers apparel and shoes less than $100 per item. Franchot is hopeful that next year, it will be expanded to cover other school supplies as well.

The tax holidays do mean lost revenue. Virginia expects it will cost about $4.5 million in tax receipts while Maryland estimates a loss of $19 million. But states believe the program pays back and retailers say it brings customers into stores.

"Our members have been really struggling," said Patrick Donoho, president of the Maryland Retailers Association.

Donoho estimates that 25 percent of retailers in the state have declared bankruptcy during the recession.

With competition from nearby states like Pennsylvania, Delaware and Virginia, Donoho says it is more important than ever to keep shoppers at home.

"Consumers today have a lot of shopping options and hopefully tax free week will get them into the Maryland stores and shopping Maryland retailers," said Donoho.

Consumer spending has been slower than hoped so far in 2010.

"The economic recovery is based on consumer spending. It's not going to happen if people don't go out and start shopping," explained Franchot.

With the winter holiday season on the horizon – it is hoped this "tax" holiday will give sales a jump start.

LINKS:

www.marylandtaxes.com/shopmd/default.asp

www.tax.virginia.gov/site.cfm