WASHINGTON, Dec 23 (Reuters) - A U.S. retail trade group asked President-elect Barack Obama on Tuesday to add a series of temporary sales tax holidays to an economic stimulus package as a way to revive consumer spending.
The National Retail Federation called for three 10-day periods of sales tax-free shopping in March, July and October 2009, which it said would save consumers almost $20 billion, or $175 for the average family.
Under the NRF’s proposal, the federal government would reimburse states for the lost tax revenue. State sales tax rates range from 2.9 percent to 7.25 percent, the group said.
In a letter signed by the chief executives of retail chains, including JC Penney Co Inc JCP.N and Saks Inc SKS.N, the NRF said the situation was "critical" with consumer confidence at the lowest level on records dating back 41 years.
“With consumer spending accounting for 70 percent of GDP, it is difficult to foresee an improvement in overall economic growth until the consumers regain their footing,” the NRF said.
The trade group wants tax-free treatment to apply to all tangible goods subject to state sales tax, except tobacco and alcohol.
Several U.S. states have sales tax holidays at various times during the year, and retailers see them as a good way to entice consumers to shop. However, the housing market bust and subsequent recession have left gaping holes in state budgets. Florida has scrapped its sales tax holiday because of budget constraints.
Obama’s advisers are considering a two-year stimulus package that is likely to exceed $600 billion as they try to stem a recession that has dragged on for a year and looks likely to worsen.
The package is expected to include infrastructure investment, which the NRF said it also supported because it would create jobs and lift consumer spending. (Reporting by Emily Kaiser; Editing by Dan Grebler)
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