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D.C.'s 2nd Sales Tax Holiday Starts Today

By Neil Irwin and Mike Flagg
Washington Post Staff Writers
Friday, November 26, 2004; Page E01

For many retailers in the District, Thanksgiving isn't the only holiday this week.

A sales tax holiday begins today in the city in an effort to attract suburban shoppers and keep District residents from doing their holiday spending in Maryland or Virginia.

Shoppers in Georgetown and the rest of the District gave stores a boost during the last sales tax holiday, some retailers said. (Rich Lipski -- The Washington Post)

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From today until Dec. 5, the District's 5.75 percent sales tax will be eliminated on clothing, shoes and accessories that cost less than $100 each. There is no limit on the total value of the purchases.

The District's chief financial officer projects that, combined with a similar tax holiday in August, customers will save $1.2 million in sales tax this year because of the program.

"With three kids I need to watch my pennies, and every little bit helps," said Ursula Girardi of Columbia, a self-described bargain hunter who said she plans to trek into the city in the next few days to take advantage of the tax holiday to buy clothing for her three young daughters.

The District officials behind the tax break are counting on decisions like that to help boost D.C. retail sales.

"Usually even our own residents head out to the suburbs to shop," said D.C. Council member Carol Schwartz (R-At Large), who led the effort to get the tax holiday. "Go to any shopping center and you can see the license tags. I felt we needed something to motivate people to think about D.C. for their shopping needs."

The first tax holiday in the District was in August 2001, followed by sales tax breaks in 2002 and earlier this year. Over the summer, the council approved a law to hold twice-yearly tax holidays. (The other, at back-to-school time, also exempts school supplies from sales tax.) The breaks were modeled in part on a tax holiday for clothing purchases that was launched in New York City in 1997 and has been mimicked around the country. Maryland held a sales tax holiday in 2001, but has not repeated it due to tight budgets. Virginia has not held any.

No hard data are available on the overall impact of the tax holidays on sales in the District, but several retailers said they have created a spurt in sales.

Richard Gatti, the chief financial officer of Hecht's, a big booster of the tax holiday, said that during the last sales tax holiday, sales at the department store's downtown location grew significantly more than sales at its suburban stores. Gatti said that even sales of items that didn't qualify for the tax exemption rose during that period, probably due to the increased traffic in the store.

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