Washington State’s retailers are ready to help the state Legislature balance the budget and create jobs to heal some of the financial wounds of the recession.
We’ve proposed an August back-to-school sales tax holiday weekend that a new study shows would boost state and local government revenues by $12.5 million and create 1,555 jobs while giving consumers a deserved financial break.
Though 17 other states have offered consumers such a break with successful results, Washington so far has not. It’s hard to figure out why not, especially considering the past three years of severe cuts to essential taxpayer services. In other places around the country, shoppers cross state lines to take advantage of similar promotions.
Retailers support one in four state jobs and contribute nearly half of the state’s general operating funds from sales taxes. What we need now is for the Legislature to pass a bill to allow us to put a sales tax holiday to work here, too.
Our Legislature has historically adopted a narrow view that a sales tax holiday is nothing more than a tax giveaway to consumers. But the current and more widely-accepted view reveals the economic opportunity of a tax holiday. Otherwise, why would 17 states still be offering them during these recessionary years?
The old narrow view allows fear from not collecting some sales taxes to cloud the reality that a tax holiday is really an incentive for people to get out and spend money not only for back-to-school clothes and supplies but all the other taxable items that consumers see and buy on shopping trips.
In Florida, for example, initially skeptical elected officials showed enough faith in a study that concluded the state’s shoppers would enthusiastically embrace the idea and generate new tax dollars. The faith of Florida legislators resulted in consumers generating $7 million in new state revenues. This was a positive swing from the state’s narrow and wrong official fiscal note.
A new study by the Washington Economics Group of consultants, based in Florida, concludes that $187 million in additional sales of taxable items would result in Washington State during a sales tax holiday.
Skeptics seem to forget how people shop and how retailers prepare for events like these. Retailers would take advantage of the event, and like on days such as Black Friday, offer deep discounts on an array of products, giving shoppers good reasons to participate.
A bill in the Legislature, House Bill 2644, limits a sales tax break to three days on moderately-priced clothes and school supplies. It is responsible, far from a blind giveaway of state tax revenues.
Since beginning the 2012 session in January, legislators took no action on the bill in a committee though it is eligible for a vote during the entire session scheduled to end in March. Considering the grave financial straits the state must overcome, retailers believe that our state legislators should place more of their faith in our knowledge of why sales tax holidays work elsewhere. Offering such an incentive would unleash the spending power of shoppers to help speed the recovery of our state’s economy.
As our Legislature prepares to ask voters to pay higher state sales taxes for the next three years, retailers are suggesting a shopping incentive that promises to raise state revenues while offering taxpayers a small tax break. It’s time for the state Legislature, consumers and retailers to support this winning idea.
Jan Teague is President and CEO of the Washington Retail Association, which represents 2800 storefronts across the state. Named a “Woman of Influence” by the South Sound Business Examiner, she is a Board member of the Association of Washington Business, a member of the Coalition of Washington Business Organizations and was 2010 President of the State Council of Retail Associations.
[Article first appeared at The Olympian and reprinted here with permission from the author.]