The third week of August is an early holiday present to the tune of $3.5 million for back-to-school shoppers from the State of Connecticut. Approximtately $58 million in clothing and footwear were sold tax-free in Connecticut last week. Now in its 11th year, the popular program has kept an estimated $40 million out of state coffers and in the hands of consumers.
Thomas J. Fiori, fiscal and policy section director with the state Office of Policy and Management, said the $40 million is just an estimate because “we do not have any exact data on what is foregone.” State budget officials derived the original estimate by segmenting the clothing and footwear into various dollar groupings, Fiori explained. “We came up with an estimate of what clothing and footwear under $300 would be worth, factoring in a slight change in consumer behavior to take advantage of the sales tax-free week.”
Nineteen states offer tax-free periods. In Massachusetts, a tax-free weekend was held Aug. 13-15, but it applied to all purchases under $2500 (with some exceptions), not just clothing and footwear.
Kevin Keenan, general manager of Westfarms Mall in Farmington, said traffic was strong at the upscale mall during the week. Upscale retailers would seem to benefit most from the tax break because clothing under $50 is always tax-free.
One children’s clothing store assistant manager in Meriden, not allowed to speak on the record because of corporate policy, said the law does nothing to benefit lower-end retailers who sell children’s clothing below $50 like her store. “It’s high-end stores like Gap Kids that see the most benefit from this,” she said.
The tax break comes during a prime retail period. According to Keenan, “August is the third busiest retail shopping month, just behind November. The third week is the busiest of the month. I specifically recall the first year the tax break went into effect [2000], we saw a significant bump.”
There’s a residual effect to the tax-break, according to Keenan, that extends to jewelry stores, restaurants, and electronics retailers. “That’s $3.5 million Connecticut consumers are keeping in their pockets. They spend the money they save in other places. This is good for business, which is good for Connecticut,” he said.
One little-known provision of the law allows for a sales tax break for the rental of clothing and footwear. Call it the “I’m getting married in the morning” tax break because it’s mostly the stuff of fantasy.
Deanna Galipeau, manager of J.T. Ghamo The Tuxedo Place in Avon, was aware of the exemption, but said most customers aren’t. “In all my years of doing this – nine – I’ve seen [the exemption] used once,” she said. “This is the kind of business where people will get it because they have to. They book months in advance.”
As witnessed by the high level of spending during Connecticut’s sale tax holiday, even in a tight economy, parents and students still need a back-to-school shopping trip for clothes, backpacks, computers and school supplies. A survey conducted by the National Retail Federation found that this year consumers expect to spend an average of $606 for back-to-school needs.
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On July 30, Aéropostale, a specialty retailer for teen fashions, opened its newest store at Westfarms. Each Aéropostale store carries both men and women’s apparel and a full range of accessories. It is a mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aéropostale stores and 7 to 12 year-old children through its P.S. from Aéropostale stores.
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Changes are ongoing at Blue Back Square in West Hartford. Umi Sushi, Connecticut’s first conveyor belt “kaiten” sushi restaurant, is due to open later this summer. Also, a space for The Persian Rug Gallery is under renovation and set to open in fall, as is Toys R’ Us Express. Also, fashion and accessories store Charming Charlie has announced it will move into a space spanning two store fronts.
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Office Depot, a provider of office products and services, announced the nationwide rollout of U.S. Postal Service offerings within the company’s retail store locations. With this new agreement in place, Office Depot becomes the first national retailer to offer Postal Service shipping products and services. Office Depot has four stores in Connecticut: Enfield, Manchester, West Hartford and Wethersfield.
