In Tight Year, Tax Holiday Brings Needed Respite

By Ben Hubbard and Sindya Bhanoo
Washington Post Staff Writers
Sunday, August 3, 2008

A simple calculation drove Nancy Bakatsias and her three children to the school supplies section of Target in Sterling yesterday morning: When it's hard to sell houses, better save on school supplies.

With Lukas, 2, riding shotgun, Madison, 5, sitting in the cart and Paige, 7, walking alongside, the Loudoun County real estate agent took advantage of Virginia's third annual sales tax holiday to buy composition books, crayons and markers for the coming year.

"The economy is really hard right now," said Bakatsias, 40. "It's harder to find a job, it's harder to sell houses. It's a scary time."

At a time when many families are struggling, the back-to-school tax breaks in Virginia and the District are especially welcome this year for those looking to trim expenses. Businesses are hoping the incentives will jump-start flagging sales, even for a few days.

From Friday through today, shoppers throughout Virginia are exempted from the 5 percent state and local retail sales tax on school supplies under $20 and each item of clothing under $100. The tax break in the District began yesterday and will continue through next Sunday, with shoppers allowed to buy school supplies and clothing costing less than $100 without paying the city's retail sales tax of 5.75 percent.

In Maryland, Gov. Martin O'Malley (D) proposed reinstating a sales tax holiday during last year's special legislative session, but lawmakers faced with a potential budget gap did not buy into the plan.

At Target in Columbia Heights, Lily Marquez watched as her daughter, Ingriz Garrido, picked out a pencil box, backpack, paper and pens.

"We're buying the most necessary supplies this year," said Ingriz, 12, a student at Lincoln Middle School. After discovering that the set of three colorful erasers she wanted was $4, she swapped them for two plain pink ones, at 94 cents.

Denise Adams, 53, was shopping at Target for her five grandchildren, ages 7 to 14. Although she always shops during the tax holiday, she was more frugal this year, buying only off the clearance racks. With a budget of $200, she was able to pick up a cartful of toys and clothes, including a toy boat for $2.48 and several shirts for $1.98 each.

"I'm coming back tomorrow for the back-to-school shopping," she said. At the nearby Staples, Xocilt Martinez spent more than $250 on construction paper, coloring books, crayons and pencil boxes for the preschool she runs. She plans to return next week for more tax-free shopping before the holiday ends, she said.

Outside the Kohl's department store in Sterling, Lynn Oliver, 41, said her family had been engaging in "strategic shopping" because of the tax break. She held up a shopping bag with six shirts, five pairs of jeans, one dress and a sweat shirt for her 10-year-old daughter, Maddie.

"We shopped all day [Friday] as well," she said, adding that the family would probably save nearly $50 when the back-to-school shopping for her two children was done. "We did a lot of tax-free damage this weekend."

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