Shoppers head to stores to spend tax-free

Valerie Montone was at first a little skeptical about the idea of tax free shopping — convinced retailers would mark up prices beforehand and wipe out the intended savings.

But after doing some comparison shopping online, Montone had a change of opinion. The head hunter from Phoenix was one of many shoppers who headed to stores Sunday to take advantage of the first day of the temporary rollback of Maryland's 6 percent sales tax.

The tax holiday, which ends Aug. 20 and is timed to the back-to-school season, can be applied to clothing or footwear under $100. Accessories such as umbrellas, watches and sunglasses are excluded.

Armed with a clipboard and shopping list, Montone was buying her 14-year-old son school clothes from Target in Towson Sunday afternoon. She also planned to visit DSW Designer Shoe Warehouse and Wal-Mart.

"I'll be able to buy a little more than I planned," Montone said. "I can get my son an extra shirt and a sundress for myself."

Maryland's tax reprieve was made possible by legislation passed in 2007 that designates a sales tax holiday for a week in August. The state is one of 16 lifting the sales tax temporarily this year to lure shoppers into stores at a time when customers are spending cautiously because of the uncertain economy.

But the tax-free period isn't popular with everyone, including critics who say it takes away much-needed revenue, especially now when states really need it. Maryland officials have estimated the state could lose $10 million to $15 million during this year's tax vacation.

A weeklong tax vacation in 2001 cost the state about $5 million, according to a study by the comptroller's office. It is unclear how much was lost from last year's tax holiday, because the state didn't do such a study. Retailers don't have to report sales that aren't taxed, making the revenue loss difficult to track.

Comptroller Peter Franchot said short-term revenue losses are outweighed by the jump start the holiday may give to consumer spending.

"Even though I am the tax collector, I believe tax-free days generate enough economic activity that it is worth it," he said Sunday.

Franchot has made a blitz of appearances at malls throughout the state promoting the holiday. Sunday he went to the Mall in Columbia and the farmer's market in downtown Baltimore. He pointed out that a family could save $60 in taxes if they spent $1,000.

"We are helping Marylanders during a time when many of them are being hammered by the economy," Franchot said.

Retailers also seem to like the holiday. Malls such as Arundel Mills and Towson Town Center promoted it on their Facebook pages and with signs outside their properties. Retail chains such as South Moon Under sent e-mail blasts out to their customers and others such as Lands' End posted information about tax free shopping on their websites.

Smaller shops got in on the act, too. Cupcake, a boutique in Fells Point that specializes in clothes that normally cost more than $100, promised to pay the sales tax of all items in its store during the tax-free week..

Jackie Steber, an executive team leader at Target in Towson, said they were seeing high volumes of apparel sales Sunday and said some of it was probably due to tax-free shopping.

"We're hopeful tax-free shopping gives people incentive to come to our store," she said.

Jekira Jackson is one shopper who went to Target for tax-free shopping. The mother of two girls delayed buying school clothes until this week in hopes of saving a little money.

"Every penny counts," said the 31-year-old nurse who lives in Baltimore.

Jennifer Miller, 39, also planned her school shopping around tax-free week. The mother of three who lives in Parkville had picked up some skirts for her 4-year-old daughter and had plans to pick up other clothing items as well.

"The way we plan on shopping we're going to save a lot," she said.

Even those who didn't have kids to buy for were excited about the savings.

Kelly Rowe is heading back into the work force after getting laid off two months ago. The 30-year-old from Parkville needed a new wardrobe for her new job at a veterinary pharmacy.

"It's good news for me," she said about the tax holiday. "I'm going back to work and need to buy a bunch of new stuff."

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