Retailers in sync with tax holiday

By GREG HASSELL

August 3, 2000 Web posted at: 3:49 PM EDT (1949 GMT)

HOUSTON, Texas (The Houston Chronicle) -- Texans' chance to cheat the taxman is here again.

Beginning Friday morning, Texas is giving shoppers a brief respite from paying sales taxes on most of their purchases of shoes and clothing. The three-day Texas sales tax holiday is timed to coincide with the back-to-school shopping season and is expected to generate bustling crowds at stores across the state.

"They are going to be three wild days for retailers. Lines at our registers will be 20 people deep on the tax-free days," said Ray Miller, president of Weiner's Stores.

State officials predict that stores will be busier than they were last year during the state's first-ever sales tax holiday.

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"As packed as the malls were, a lot of people told us they had never heard about it," said Sheila Clancy, spokeswoman for the Texas Comptroller's Office. "We are expecting it to be much bigger this year."

Many retailers agree.

"I think it is going to be even busier than last year. Last year we had to spend a lot of time explaining what was tax exempt and what was not," Miller said. "This year people will understand the drill a lot better and be more prepared to take advantage of the savings."

This year's tax holiday begins at 12:01 a.m. Friday and ends at midnight Sunday. Just like last year, shoes and clothing commonly used for everyday wear by adults and children will be exempt, provided each item costs less than $100. Clothing and equipment used exclusively for athletic purposes -- such as golf shoes or football pants -- will not be tax exempt. Likewise, the law does not exempt accessories like jewelry, handbags and wallets.

The tax break includes regional and local sales taxes. In Houston, the total freight for all state, local and regional sales taxes totals 8.25 percent on retail purchases.

Many retailers will sweeten the pot with extra discounts and extended store hours. The First Colony Mall will keep its doors open until midnight Saturday. Both Foley's and Oshman's Sporting Goods confirmed they will have big sales that weekend, but they are keeping their exact plans under wraps until the days right before the event.

When the state held its first tax-free holiday last summer, retailers were unsure if shoppers would embrace the event or dismiss it as a political gimmick that offered little relief for their pocketbook.

"We're not sure what the impact will be, because we've never had anything like this before," one mall manager speculated last year.

They needn't have worried.

"It's a zoo here," a spokeswoman for the First Colony Mall reported back then. "We had people shopping in the mall at 8 a.m."

During the three-day holiday, Texans spent an estimated $400 million on tax-exempt clothing and shoes, saving more than $32 million in sales taxes. That included $25.6 million in state sales taxes and $7 million in uncollected local taxes.

"We are expecting great crowds here," said the General Manager of Katy Mills mall, Mace Hirt. "Staffing levels at the mall and in the stores wil be ramped up to Christmas holiday levels."

While merchants and state officials proclaim the idea of a tax holiday a success, they admit the event has its faults. Even though the idea of the event is to help families save on their back-to-school purchases, the list of tax-exempt items includes frilly lingerie, but leaves out backpacks, pencils, paper, notebooks and other school supplies.

Shoppers and retailers have complained loudly about the inconsistency, but the state Legislature has not been in session since early 1999, and their approval is necessary to change the provisions of the sales tax holiday law.

State Sen. Rodney Ellis, D-Houston, who played a key role in writing the original law, said he will push for changes when the Legislature meets in January.

"It was better to have a bill that was imperfect and still give Texans a tax-free holiday," the Houston Democrat said of the current law.

Ellis said he will push to change the law to add backpacks, crayons, pencils, paper, notebooks, calculators, dictionaries and like items to the tax-exempt list.

He also said he will push to extend the holiday from three days to something on the order of two weeks.

"Texas has one of the most regressive forms of taxation in the country," he said. "A high sales tax hits low-income people and the elderly much harder than anyone else. That's not right. It's not fair, and this would be a way to give them some relief."

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