Sales Tax Moratorium on Hold

Chances for passage of a national sales tax moratorium bill have once again been delayed with the demise of Congress’ stimulus package late last month. Now retail industry officials are hoping the bill can piggyback on new legislation that would go into effect by spring 2002.

“If we can get a late January passage, then we’re pushing for late March or early April,” said J. Craig Shearman, senior director of media relations for the National Retail Federation, one of the co-sponsors of the bill. “By starting from scratch in January, we can build up support for the measure and get in on the ground floor of the stimulus package. We’re confident it will get included in the new bill.”

Originally intended to jumpstart holiday spending, the measure, also backed by a coalition of retailers, including Federated Department Stores Inc., May Department Stores Co., J.C. Penney Co. Inc. and Sears, Roebuck & Co., would provide a 10-day tax break on most items, excluding alcohol, restaurant meals and tobacco products, Shearman said. All participating states collecting sales tax would receive federal reimbursement.

Over the past three years, seven states have implemented brief sales-tax holidays, which have proven to be a hit with consumers, Shearman said. Given the country’s lukewarm sales over the holidays, the moratorium would provide a needed psychological boost to consumers for future spending, he said. —Nola Sarkisian-Miller