The Evening Capital, 24 July 2001

State readies for tax-free purchase week
By SARA MARSH, Staff Writer

                                             Hoping to keep thousands of residents from fleeing across state lines to
                                             stock up on new fall and winter clothes, Maryland for the first time will lift
                                             its 5 percent sales tax on clothing and footwear for one week, starting
                                             Aug. 10.

                                             "Shop Maryland Week: More Clothes, Less Tax," was approved last year
                                             by the General Assembly and is designed to coincide with back-to-school
                                             shopping. The tax-free week will run from Aug. 10 to 16 statewide.

                                             ""Shop Maryland Week' will help families save money on their
                                             back-to-school shopping, while supporting local merchants," said state
                                             Comptroller William Donald Schaefer, who announced the sales tax-free
                                             week today during a news conference at the Eddie Bauer store at
                                             Arundel Mills in Hanover.

                                             Mr. Schaefer also filmed a public service announcement about the
                                             tax-free week this morning. The advertisement will air on radio and
                                             television, starting Aug. 6, said Christine Duray, his spokesman.

                                             Retail merchants, who are planning special sales and promotions during
                                             the week, hope the event will encourage Marylanders to shop at home
                                             instead of going out of state looking for bargains.

                                             "It's no secret retail sales have not been what (retailers) would have liked
                                             them to be this year," said Thomas Saquella, president of the
                                             Annapolis-based Maryland Retailers Association.

"We're hoping that the combination of the tax-free week, as well as the
federal income tax refund checks, will give a boost to retailers."

                                             During the tax-free week, customers won't have to pay Maryland's 5
                                             percent sales tax on any item of clothing or footwear that costs less than
                                             $100.

                                             For example, an individual could buy a $60 pair of shoes, a $40 pair of
                                             pants and a $30 shirt and pay no sales tax on any of the items -- even
                                             though the total bill would be $130 -- because each item costs less than
                                             $100. In this case, the customer would save $6.50 in sales tax.

                                             The tax-free week -- which is modeled on sales tax holidays in states such
                                             as New York, Florida and Texas -- doesn't apply to accessory items, such
                                             as jewelry, watches, handbags and ties.

                                             The tax-free week will be in effect only this year. The Comptroller's
                                             Office will compile a report for lawmakers evaluating its impact.
                                             Lawmakers will then have to decide whether to continue it.

                                             Supporters of the measure -- including all 18 members of Anne Arundel's
                                             legislative delegation -- say it will benefit poor families, who are
                                             disproportionately harmed by the sales tax.

                                             The measure also will keep shopping dollars in Maryland, rather than
                                             allowing them to flow to neighboring states such as Delaware, which has
                                             no sales tax, and Pennsylvania, which doesn't tax clothing.

"It's a small step, but any little savings can go a long way," said state Sen.
Ed DeGrange, D-Glen Burnie.

"Every little bit helps," agreed Del. Janet Greenip, R-Crofton.

But critics of the tax-free week say it's nothing more than a costly
gimmick.

                                             "The savings are insignificant to the average family," said Annapolis
                                             resident and private thrift consultant Eileen Coale.. "It offers no
                                             meaningful savings whatsoever."

Last year, the average family spent about $455 on back-to-school items,
she said. With the tax-free week, that family will save about $22.75.

                                             In addition, fiscal analysts estimate that state sales tax revenues will drop
                                             by about $6.7 million as a result of the tax-free week -- about 0.3 percent
                                             of the $2.8 billion Maryland collects annually from the sales tax, Ms.
                                             Duray said.

But Towson University economist Anirban Basu said the week is more
than a gimmick.

"The consequences are real," he said. "People like to save whenever they
can."