The sales tax holiday week that arrives later this month — Aug. 21 to Aug. 27 — has a different flavor than in years’ past because now all clothing is subject to the state’s sales tax.
In the first 11 years of the tax holiday’s existence, items under $50 were tax exempt. They no longer are. Since July 1, all clothing, down to socks costing a buck at the McDonald’s playground, are subject to sales tax. The sales tax holiday is the only week of the year when children’s clothing is exempt from the new 6.35 percent sales tax.
Retailers have no sense of what the impact is going to be this year.
Last year, according to numbers supplied by the state Office of Policy and Management, approximately $58 million in clothing and footwear were sold tax-free in Connecticut. That kept about $3.5 million out of the state’s tax coffers.
Tim Phelan, longtime president of the Connecticut Retail Merchants Association, said, “We’re anxious to see what this year is going to look like.” Factors make this year’s sales tax holiday unpredictable, he explained, including: higher sales tax rate, increases in the income tax rate that are retroactive to Jan. 1 and kicked in Aug. 1, and the economy.
“People are a little bit uncertain,” he added. “This could be a real break for consumers. They could respond in big numbers.”
The CRMA “fought hard” to keep the clothing exemption allowance that was eventually wiped out. “The legislature kept the sales tax holiday to mitigate the loss,” he added. “It is a very welcome development that is still on the books.”
Kevin Keenan, general manger of Westfarms Mall in Farmington, had similar sentiments. He said, “Retailers in general are more aware of the importance of the sales tax holiday both because of the elimination of the $50 exemption as well as the 0.35 percent increase in the sales tax.”
While his property is not known, generally, for its lower-priced clothing, Keenan expects cash registers will be hopping in the coming weeks. “The last two to three weeks of August are historically among the busiest weeks of the year for Westfarms’ retailers and we anticipate that this year’s sales will be as strong as last year,” he said.
There’s a residual effect to the tax break, Keenan said, that helps jewelry stores, restaurants, electronics retailers and others. “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.
CRMA’s Phelan said it’s a myth that the sales tax holiday only delays purchases and costs the state money. “This year will be a good test,” he said, explaining that heavy promotion and advertising piques consumer interest. “There’s an anticipation to the holiday that drives sales,” he said.
Survey spots trends
National Retail Federation spokesperson Kathy Grannis has identified five of the top back-to-school retail trends for 2011 based on an NRF survey. They are:
#1: This year’s theme for parents: “Spend where you need to, save where you can.”
#2: It’s not about the best price. It’s about the best deal.
#3: The economy is still impacting spending.
#4: In case you missed the memo, department stores are back. She adds, “[An NRF] survey found 47.6 percent of college shoppers and 57 percent of K-12 shoppers will head to department stores — the highest percentage for both groups in NRF’s eight-year survey history.”
#5: Electronics. They’re not just for classrooms anymore.
This factoid bodes well for Connecticut’s sales tax holiday week: “Nearly one-third (31.2 percent) of parents of K-12th grade students will shop one to two weeks before school starts, up from 24.8 percent last year.”
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‘Wicked’ display at Westfarms
From Aug. 12 to Sept. 11, visitors to Westfarms can step inside the national road production of “Wicked,” in a cross-promotion for the show that returns to The Bushnell in Hartford from Aug. 24 to Sept. 11. Visitors to Westfarms can see Wicked exhibits, special offers from retailers, a cast appearance, giveaways and other exclusive offerings.
The cast appearance takes place Wed., Aug. 31 at noon in the center court, where through Sept. 11 visitors can walk through Glinda the Good’s bubble, view the “Behind the Emerald Curtain” museum display and take a photo in Oz. More information is available at www.shopwestfarms.com.
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Cox overhauls Meriden store
Cox Communications has opened a new ‘Cox Solutions Store’ at the Crossings at Smithfield, located at 687 East Main St., Meriden. The Cox Solutions Store is an all-over update of the Cox retail location that formerly occupied the space. All of Cox’s services, including Cox Wireless, are on display for customers to touch and feel while learning about the various features. Solutions specialists can handle billing questions and technical issues in the Customer Care area, sell Cox products and accessories like HDMI cables, accept payments, and issue equipment on the sales floor.
