Maryland shoppers are getting a sales tax break during the state's third annual tax-free week, designed to kick-start the back-to-school sales while keeping Marylanders out of more tax-friendly states.
"In Pennsylvania you've got no tax on clothing whatsoever, and in Delaware there's no sales tax," said Jeff Zellmer, legislative director for the Maryland Retailers Association.
"The competition has been very, very rough -- this'll give us the edge," Zellmer said. "The Internet [shopping] has jumped in on us, and that's been taking us down, too."
This year's tax-free week, when Marylanders get a break from paying the state's 6 percent sales tax on certain purchases, runs through Saturday and is the third holiday since the state resumed the promotion in 2010. Tax-free weeks were held twice during the 2000s and saw such success that the retailers association lobbied to make the week permanent. The sales tax relief applies to clothing and footwear items, excluding accessory items, that cost $100 or less.
However, the week-long break from taxes comes at a cost -- an estimated $10 million in projected tax revenue won't be collected by the state in August, according to the Maryland Comptroller's Office. But the boost in business more than makes up for the dip, said Kim Frum, a spokeswoman for Comptroller Peter Franchot.
"As it's taken root, it's gotten more and more popular with consumers and retailers," Frum said. "At the end of the summer, it generates a lot of foot traffic. [Usually] this time, it's kind of slow; people aren't really thinking about shopping ... It gets them back into it."
Zellmer said the association plans to issue sales statistics after this year's tax-free week concludes. But based on a survey of a major retailer during the state's tax free week in 2005, he said sales typically increase by about 25 percent during the promotion.
Maryland's tax holiday is longer than Virginia's, which has been held the first weekend in August since 2006. But Virginia also includes school supplies selling for $20 or less. The District abandoned its tax holiday in 2009.