Tax holiday idea may be chilling sales

  • Tuesday, November 20, 2001 9:00pm
  • Business

Associated Press

OLYMPIA — The precarious state of Sen. Patty Murray’s proposed tax holiday has Washington’s car dealers steaming about customers reluctant to buy now and perhaps miss a big discount.

State officials worry about the tax dollars that could be lost in an already tough budget climate if consumers keep postponing those big-ticket purchases.

Three weeks ago, Murray, D-Wash., proposed suspending state sales taxes for 10 days during the holiday shopping season as a way to stimulate the nation’s economy. Her plan envisioned federal reimbursement for the tax dollars that would be lost.

Although the proposal made splashy headlines around Halloween, Congress broke for Thanksgiving without approving it, so Murray’s "let’s go shopping" bill will miss at least one of the year’s busiest shopping weekends.

But Murray is not willing to give up. That has retailers who handle big-ticket items such as cars grinding their teeth. Customers browse, they say, but put off buying in hopes that a tax holiday will lop more than 8 percent — $1,600 on a $20,000 vehicle — off the price.

"If it had never leaked to the public we’d be a lot better off," said Chud Wendle, owner of Wendle Motors in Spokane. Dealers were doing record business in October, thanks to zero-interest financing offered by car manufacturers after the Sept. 11 terrorist attacks.

But Wendle said he closed 20 percent fewer deals in the first two weeks of November than he did in the first two weeks of October, even though the zero-interest financing is still available.

"A large part of that is the consumer waiting for this alleged tax holiday," Wendle said.

Dealers across the state report similar reluctance, said Vicki Fabre, executive vice president of the Washington State Auto Dealers Association.

Murray’s office holds out hope that the idea can be attached to a larger economic stimulus package bill in time for last-minute Christmas shoppers.

"It continues to be a good idea and will continue to provide stimulus to an economy that is in desperate need of stimulus," said Todd Webster, Murray’s spokesman. "We hope to get it in the economic stimulus package after Thanksgiving."

Meanwhile, a big drop in sales of cars and other big-ticket items would translate into a similar drop in sales tax revenue. But there’s no way to precisely measure the impact of Murray’s proposal yet, because tax returns for this month aren’t due for weeks, said Mike Gowrylow, a state Department of Revenue spokesman.

For Gov. Gary Locke’s budget writers, a phantom tax holiday looks like more bad news in an autumn already loaded with rising costs, shrinking revenues and unpleasant choices.

"It may be having the opposite effect on the state economy if it is indeed the case that people are refraining from spending on big-ticket items in the hope or in the anticipation that there is going to be a tax holiday," said Irv Lefberg, a top official in Locke’s Office of Financial Management.

Locke agreed to support the proposal and call a special session of the Legislature to take advantage of the tax holiday only if several conditions are met, including dollar-for-dollar reimbursement from the federal government. So far, the conditions haven’t been met, said Dana Middleton, Locke’s press secretary, and the logistics of putting the holiday into effect this year would be nearly insurmountable.

Critics and policy experts cast doubt on the tax holiday’s chances even as Murray and Sen. Olympia Snowe, R-Maine, floated the idea.

The two senators wanted federal taxpayers to pick up the tab for the states’ lost revenue — roughly $6.5 billion. But five states don’t have sales taxes, and their senators might have been unwilling to support the plan.

Seven states and Washington, D.C., have tried temporarily halting sales taxes, some of them in the summer before the school year starts.

Washington would need reimbursement of about $200 million lost to state and local governments, according to the state Department of Revenue.

Washington’s sales tax, currently more than 8 percent in most areas, supplies nearly half the revenue for the state treasury. Washington has no income tax.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

FILE — Boeing 737 MAX8 airplanes on the assembly line at the Boeing plant in Renton, Wash., on March 27, 2019. Boeing said on Wednesday, Feb. 21, 2024, that it was shaking up the leadership in its commercial airplanes unit after a harrowing incident last month during which a piece fell off a 737 Max 9 jet in flight. (Ruth Fremson/The New York Times)
Federal judge rejects Boeing’s guilty plea related to 737 Max crashes

The plea agreement included a fine of up to $487 million and three years of probation.

Neetha Hsu practices a command with Marley, left, and Andie Holsten practices with Oshie, right, during a puppy training class at The Everett Zoom Room in Everett, Washington on Wednesday, July 3, 2024. (Annie Barker / The Herald)
Tricks of the trade: New Everett dog training gym is a people-pleaser

Everett Zoom Room offers training for puppies, dogs and their owners: “We don’t train dogs, we train the people who love them.”

Andy Bronson/ The Herald 

Everett mayor Ray Stephenson looks over the city on Tuesday, Jan. 5, 2015 in Everett, Wa. Stephanson sees  Utah’s “housing first” model – dealing with homelessness first before tackling related issues – is one Everett and Snohomish County should adopt.

Local:issuesStephanson

Shot on: 1/5/16
Economic Alliance taps former Everett mayor as CEO

Ray Stephanson will serve as the interim leader of the Snohomish County group.

Molbak's Garden + Home in Woodinville, Washington will close on Jan. 28. (Photo courtesy of Molbak's)
After tumultuous year, Molbak’s is being demolished in Woodinville

The beloved garden store closed in January. And a fundraising initiative to revitalize the space fell short.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.