Organizers of Maryland's tax-free shopping week are aiming to give back-to-school buying in August the kind of boost that Black Friday gives to holiday spending each fall.
Now in its fourth year, the annual tax holiday gives consumers a break on the state's 6 percent sales tax on most apparel and footwear priced up to $100. The week runs Sunday through next Saturday.
The breaks have drawn criticism, principally because the state stands to forgo an estimated $5 million in tax revenue.
But state Comptroller Peter Franchot said the benefit to consumers and retailers — especially small businesses — is worth it. Sales climb up to 10 percent in what has become Maryland retailers' second-biggest week of the year, he said.
"I view it as a gain for Maryland families and Maryland businesses," Franchot said during a stop last week at Towson Town Center to promote the tax holiday. "Maryland shoppers who have been hammered by the recession ... deserve and should take advantage of the tax break."
The retail industry employs about 400,000 people in the state. Its biggest week of the year falls between Thanksgiving and Christmas, moving from year to year according to the calendar.
Tricia Smith, who was shopping Thursday at the Towson mall with two sons, said she has been planning back-to-school shopping around the tax-free week but mistakenly thought it started last week.
"We're going to come back," she said. "It's an inducement for me because I have four sons."
Retail sales are expected to total $100 million, much higher than in a typical August week, said Patrick Donoho, president of the Maryland Retailers Association.
"More importantly, people start shopping," Donoho said. "It gets people back in the stores ... particularly in summer, which, unless you're a specialty retailer, is not a vibrant sales period."
Retailers hope to see more shoppers from out of state.
"People in Pennsylvania and Delaware can discover retail in this state," Donoho said.
Tax-free shopping weeks have led to as much as 40 percent higher sales at The Sports Shop in the Towson mall and in Harborplace, owner Mike Durham said. Mall shoppers tend to come in frequently just to browse and seek out sales, then buy when they get a respite from taxes or find other bargains, he said.
"It's a really busy week," Durham said.
But Kay Bell, a contributing tax editor for Florida-based Bankrate.com, says consumers tend to shift their spending, waiting for a tax-free week, rather than spend more overall.
The tax-free periods that have cropped up in numerous states over the past decade are mostly politically driven, she said. States have been offering some form of temporary tax-free shopping since 1999, when Texas offered it, according to the Federation of Tax Administrators.
"It's always a good way, especially if a state had to raise taxes elsewhere, it's a giveback to taxpayers," Bell said. "That's part of the reason they keep doing it."
States also compete with neighboring states offering similar events.
But a Maryland official raised questions last week about politicians' role in tax-free shopping.
Harford County Executive David R. Craig, a Republican candidate for governor in 2014, said some tax relief to help spur the economy is better than nothing, but it raises a broader issue.
"Why is it just for a week, and why do politicians decide what items qualify?" Craig said. He noted that the state has collected nearly $4 billion in sales taxes since the tax was increased in 2007.
"Handing out some extra pocket change for shoes, shirts and pants is a sorry pittance considering this regressive, harmful tax hits working people the hardest," he said.
At least 18 states are offering tax-free weeks this year. Some, such as Florida and Georgia, include school supplies and computers up to a certain price.
In Maryland, items that won't be taxed include a range of apparel and footwear and some accessories, such as belts, hats and gloves. Items that will be taxed include ties, jewelry, watches and other accessories.
In the past, Franchot has urged that the list of tax-free items be expanded to include school items such as backpacks. He said last week that he plans to formally recommend that school supplies be included.
While the tax-free weeks have come and gone in other states, Franchot said he believes Maryland's week is here to stay.
"The legislature passed it," he said. "If they ever tried to repeal it, there would be a revolt."
Shop Maryland Tax-Free Week
When: Sunday through next Saturday
Where: Retailers in Maryland
How it works: Shoppers pay no sales tax on qualifying apparel and footwear priced at $100 or less per item.Copyright © 2014, The Baltimore Sun