District, Maryland Tax Holiday Repeal Sends Shoppers to Virginia, Other States

Shantella Y. Sherman | 8/19/2009, 1:24 p.m.

Legislation enacted to repeal the District of Columbia€s August 2009 sales tax holiday has parents searching for ways to save money on back-to-school clothing and school supplies. And, while the repeal helps the city save an estimated $640,000 in sales tax revenue, it has forced District shoppers into Virginia and other nearby states to help them stretch their dollars.

Janice Reed-Sands, 43, of Southwest said that with five teenagers, including 16-year-old twins, her budget determines where she shops. She has depended on the tax holiday for years. She said that repealing it this year, when many people need it most, was selfish on the part the D.C. Council.

Since 2001, the District has offered a nine-day exemption from the 5.75 percent sales tax on clothing, accessories, shoes and school supplies for $100 or less.

€D.C. and Maryland don€t understand that consumers need the same financial breaks that they do. Now, instead of D.C. losing that $640,000 through the tax holiday, they will most likely lose it from shoppers going to Virginia and other states instead,€ Reed-Sands said.

Maryland also repealed its 2009 sales tax holiday for the second year. The Maryland General Assembly did not pass legislation authorizing the program for 2009, leaving shoppers in both areas absorbing the extra cost.

In prior years, the Maryland Sales Tax Holiday gave shoppers a five percent savings on clothing and footwear priced at $100 or less. The sales tax exemption applied to each eligible item, regardless of how many items were purchased at the same time. During the Virginia Sales Tax Holiday, held Aug. 7 through 9, shoppers were able to save five percent on purchases of school supplies costing $20 or less per item, or clothing and footwear priced at $100 or less.

Reed-Sands, a grocery store associate, said that she purchased school supplies from the Potomac Yard Target in Alexandria, Va. She said that the in-store sales were big in addition to the five percent sales tax exemption.

€I didn€t buy clothes, but I did get all of the school supplies from Virginia. It was a definite loss for D.C. because most of the cars on the lot had D.C. tags. I really believe the D.C. Council did more harm to themselves than good,€ Reed-Sands said.

Other District residents are traveling to nearby states, including North Carolina and New York, to take advantage of outlet malls, knock off markets, and €second chance€ stores. For example, North Carolina has included items over $100 and hardware such as computers, printers, printer supplies, computer software plus dorm supplies (linen, bath and kitchen items) during their tax holiday. All of the items are exempt from state and local sales tax.

Eddie Dillard, 38, of Northwest, said that his daughter, Naiya, 15, wants designer clothes, even though his nurse€s aide salary is unable to cover them. Twice a year Dillard said that he travels to New York€s Canal Street to find the knock-off designer labels his daughter likes for about 15 percent of the original item prices. He said with tax holidays and other financial incentives repealed in the metropolitan area, he has little choice other than to go to places where he can get more bang for his buck.

€I feel that my daughter deserves the best or at least the next best thing, which in my estimation is a good knock-off of the best,€ Dillard said.

€The stuff is good quality, affordable, and keeps Naiya looking like a star. The trip is always worth it.€

The Maryland Legislature will reportedly end the repeal on Tax Holidays next year with a week-long exemption planned next August.