March 2

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Sales Tax Holiday Succeeds After Nine Years of Debate

March 2, 2006

Richmond, VA - Two advocacy groups, Retail Alliance and the Retail Merchants Association, kept the Virginia Sales Tax Holiday legislation alive this week. The associations have worked to pass the tax-break holiday out of the General Assembly for nine years.

The associations’ representatives convinced legislators that a potential conference debate on the bill could kill the legislation. In meetings with the House leadership, delegates were urged to accept the Senate’s less fiscally burdensome version of the bill. The legislation now requires Governor Timothy Kaine’s signature to guarantee a Virginia Sales Tax Holiday.

Retail Alliance represents the 16 cities and counties in the Hampton Roads region and the Retail Merchants Association represents Richmond and 14 surrounding cities and counties. The two associations are 103- and 100-years-old, respectively, and partner to represent Virginia-based merchants at the General Assembly.

HB 532 provides a 5 percent savings on necessary school items including footwear, clothing and general supplies such as pens, notebooks, calculators, etc. The tax break applies to apparel and shoes, each item valued at $100 or less, and school supplies, each item priced at $20 or less. If signed by the governor, the Virginia SalesTax Holiday goes into effect the first weekend in August, 2006.

“We are certain Governor Kaine understands the need for a Virginia tax-free shopping period. It’s time for Virginia to provide parents targeted relief when they face back-to-school expenses,” said C. Donald Porter, president/CEO, Retail Alliance.

All of Virginia’s border states – North Carolina, Maryland, Tennessee – and the District of Columbia have Sales Tax Holidays. In committee hearings, advocates emphasized that a Virginia Sales Tax Holiday will keep Virginians shopping in-state rather than crossing borders to shop outside the state during the back-to-school shopping period.

A key provision in the legislation allows retailers who don’t sell clothing or school supplies to pay the tax for their customers and advertise a Sales Tax Holiday during the back-to-school period. Retail Alliance and the Retail Merchants Association insisted that this provision remain in the bill because it gives all merchants an opportunity to attract more customers.

According to the National Retail Federation (NRF) 2005 Back-to-School and Back-to-College Surveys, $47.8 billion was spent on back-to-school and back-to-college merchandise. Back-to-school sales rank second only to the December holiday season.

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