CHICAGO, Feb 5 (Reuters) - The largest U.S. retail trade group said current economic stimulus legislation might not do enough to spur consumer spending and repeated its call for a series of temporary sales tax holidays.
The National Retail Federation is “extremely concerned that it does not do enough to immediately stimulate consumer spending or to preserve the tens of millions of jobs that consumer spending supports,” Steve Pfister, the group’s senior vice president, said in a statement on Thursday.
“With consumer spending representing two-thirds of GDP, it is difficult if not impossible to foresee an improvement to overall economic growth until consumers regain confidence and resume spending,” he said in comments that were also sent in a letter to U.S. senators.
The Senate is working to craft legislation for a roughly $800 billion plan promoted by President Barack Obama to stimulate the U.S. economy, which has been in a recession since 2007.
The NRF, which represents more than 1.6 million U.S. retail establishments, again called for three 10-day sales tax holidays this year — one in March, one in July and one in October.
The tax holidays, similar to ones adopted by U.S. states at various times of the year, would allow consumers to purchase most goods without paying sales taxes. Alcohol and tobacco would be excluded.
While states have had tax holidays in the past, the housing bust and subsequent recession have left gaping wholes in state budgets. Florida scrapped its sales tax holiday because of budget constraints.
The NRF estimates that its proposed tax holidays would save consumers about $20 billion, or $175 per family. The U.S. government would reimburse states for the lost revenue.
The proposal comes as the trade group forecasts a 2.5 percent drop in retail sales in the first half of 2009. (Reporting by Brad Dorfman; Editing by Lisa Von Ahn and Gerald E. McCormick)