Phoenix-based PetSmart in late December added its voice to pleas to incorporate a series of national sales tax holidays as part of economic stimulus legislation working its way through Congress at press time.

Chief executive officer Philip L. Francis, who also is first vice chairman of the Washington-based National Retail Federation, added his signature to an NRF proposal urging a series of three national sales tax holidays.

“Retailers’ considerable experience with sales tax holidays has shown that they provide a substantial inducement for people to shop,” the NRF said. “With consumer spending accounting for 70 percent of [gross domestic product], it is difficult to foresee an improvement in overall economic growth until the consumers regain their footing.”

NRF proposed that tax holidays be held during March, July and October 2009, each lasting 10 days and including two weekends. Tax-free treatment would apply to all tangible goods subject to a state sales tax, ranging from apparel and home furnishings to restaurant dining and automobiles, but would exclude tobacco and alcohol.

By temporarily lifting the sales tax for the three 10-day periods, NRF estimates that consumers could save nearly $20 billion—almost $175 for the average family.
In addition to saving consumers money, the sales tax holidays would help support the 25 million jobs in the U.S. retail industry, or one out of every five U.S. workers, the NRF said.

The federal government would reimburse the 45 states that have sales taxes for the lost revenue, and would provide the five states without a sales tax (Alaska, Delaware, Montana, New Hampshire and Oregon) with revenue approximating the sales tax reimbursement that would be received by states with similar population.

A number of states hold sales tax holidays each year—most in the summer to help families with the cost of school supplies.[March 2009 PET AGE]