Posted on Fri, Jul. 28, 2006

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Tax holidays sell Strand retailers

By Emma Ritch

The Sun News

Shoppers can avoid paying sales tax during two weekends this year in South Carolina, the only state offering a second tax holiday for 2006.

In addition to the seventh year of the back-to-school tax exemption weekend in August, the state will eliminate taxes during the busy post-Thanksgiving weekend, which officials say could boost an economy hurt by rising gas prices and draw shoppers from other states.

State and local sales taxes will be waived on all back-to-school items from Aug. 4 to 6, saving shoppers 5 percent on those goods in Horry and Georgetown counties. On Nov. 24 and 25, all purchases will be exempt from the 5-percent state sales tax, but not accommodations taxes, local sales taxes or use taxes, according to the S.C. Department of Revenue.

Revenue officials estimate that shoppers save about $3 million each year during the annual back-to-school tax holiday.

"It's kind of like having a blanket coupon for every single retailer in the area," Myrtle Beach Area Chamber of Commerce spokeswoman Nicole Aiello said.

"When people feel like they're getting a good deal, they'll come out and spend more money."

The Chamber expects both weekends to have a bigger effect on Grand Strand retailers than on other stores across the state because of the tourists.

"Myrtle Beach is definitely a shopping destination," Aiello said. "We have the potential to really benefit from this sales-tax holiday. One of the reasons is in August we still have a lot of tourists in the area."

Shopping is the second-most-frequent activity of tourists here after visiting the beach, she said.

The tax-free weekend is one of the three busiest times for Tanger Outlet Center's two locations in Horry County, along with July Fourth and Thanksgiving, Marketing Director Sherri Crawford said.

Crowds will likely be even heavier after Thanksgiving because South Carolina is the only state planning to exempt taxes during the country's busiest shopping weekend, said Rachelle Bernstein, the National Retail Federation's vice president tax counsel.

"You often see people crossing a state border to purchase goods without a sales tax," said Bernstein, who projected that more N.C. residents would do their holiday shopping on the Grand Strand.

South Carolina was one of the first states to initiate a tax holiday, exempting back-to-school items in 2000 after a push by then-Gov. Jim Hodges.

The General Assembly voted to expand the tax-free shopping to two weekends this year as part of property tax reforms, which will increase the state sales tax from 5 to 6 percent on June 1, Department of Revenue spokesman Danny Brazell said.

The back-to-school tax exemption is growing in popularity. Nine states, including Georgia and North Carolina, plan tax-free weekends during the same time period as South Carolina, and three states and the District of Columbia plan to eliminate taxes for another time period in July or August.

"Even though those states have all jumped on the bandwagon, the tax-free weekend really still has a huge impact on [Tanger] retailers," Crawford said.

The International Council of Shopping Centers estimated that national back-to-school spending will total $24 billion this year. More than half of consumers expect to do back-to-school shopping in August, according to a consumer spending survey by ICSC and Citigroup Investment Research.

Chamber President Brad Dean has said Grand Strand retailers are seeing an increase in consumer spending, but are paying more because of the rising gasoline costs. As a result, area stores will likely see moderate growth, he said.

The NRF's Bernstein said the state's two tax-free weekends could help.

"It increases traffic into the stores. Obviously they are buying the goods that are the subject of the holiday, but they are doing other shopping too," she said.

But not everyone thinks the tax-free shopping weekend is the best way to grow the economy. Gov. Mark Sanford has criticized the method because he said it doesn't address the larger problem of over-taxing residents.

"Any tax relief is good, but we would rather it be something that lasts," Sanford spokesman Joel Sawyer said.

Contact EMMA RITCH at 444-1722 or eritch@thesunnews.com.

Estimated consumer savings during S.C.'s tax-free weekends:

2000 | $3.6 million

2001 | $2.7 million

2002 | $2.9 million

2003 | $2.3 million

2004 | $2.7 million

2005 | $2.6 million

Some of the items that are exempt from taxes Aug. 4-6:

Clothing, clothing accessories, footwear, school supplies, computers, printers, computer software, blankets, bedspreads, bed linens, sheet sets, comforter sets, bath towels, shower curtains, bath mats, pillows, pillowcases.

Source: S.C. Department of Revenue