Retailers will struggle to win tax rebate sales

By Nicole Maestri - Analysis

NEW YORK (Reuters) - Eagerly awaited tax rebates will begin reaching consumers on Monday, but struggling retailers may only get a small boost from the stimulus checks as shoppers use the extra cash to pay down debt, or cover basic expenses, like gas and food bills.

The U.S. Treasury Department is accelerating its schedule for distributing the checks, which are part of its $152 billion 2008 economic stimulus package. Payments totaling more than $100 billion should be mostly in consumers' pockets by the end of June, with the first payments arriving next week instead of in early May.

Retailers are eyeing the rebates as a means to boost business as the slowdown in consumer spending has battered their sales and profits.

But the rebates will mainly be going to individuals with taxable incomes of less than $75,000 and couples with taxable income below $150,000 -- the consumers most affected by higher food prices, rising energy costs, the prolonged housing market slump, the credit crunch and a weakening job market.

Instead of splurging on furniture, jewelry or a big-screen TV, those beleaguered shoppers may use the rebates on basics like gas, groceries and bills.

"Consumers are so focused on getting their own financial houses in order," said Britt Beemer, chairman of America's Research Group, which tracks consumer behavior. "You're seeing a lot of consumers act very responsibly, and say, 'I'm not going to spend this money.'"

FREE GROCERIES WITH THOSE TAX REBATES

The rebates pay up to $600 for individuals and $1,200 per married couple. An additional $300 per child will go to families with children.