Washington, D.C. The National Retail Federation asked President-elect Barack Obama on Tuesday to incorporate a series of national sales-tax holidays into upcoming economic stimulus legislation as a step toward rebuilding consumer confidence.
NRF said that short-term gains from consumer spending and long-term growth from job creation are both needed to achieve economic recovery.
NRF proposed that tax holidays be held during March, July and October 2009, each lasting 10 days, 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.
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.
State sales-tax rates range from 2.9% to 7.25% and add $236 billion a year to the amount U.S. consumers pay for goods and services, according to the U.S. Census Bureau.
By temporarily lifting the sales tax for the three 10-day periods, NRF estimated that consumers could save nearly $20 billion. Based on the 112.4 million households in the United States, the figure would amount to 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, and millions of jobs in industries that supply retailers with merchandise and services, according to NRF.