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State prepares for second sales tax holiday weekend

By Phillip Rawls
Associated Press Writer

MONTGOMERY — Alabama will observe its second sales tax holiday weekend on Aug. 3-5, when parents can stock up on school clothes and supplies and give merchants one of their biggest weekends of the year.

Retailers say they are extending hours, scheduling extra workers and planning special sales based on the success of the first sales tax holiday weekend in 2006.

"It was great. It was like a day after Thanksgiving, and we are expecting it to be bigger than last year," said Lynne Dickerson, marketing director for Wiregrass Commons Mall in Dothan.

Her mall will stay open late all three days, she said.

Mickey Gee, a marketing professor at The University of Alabama at Birmingham and the operator of three clothing stores in Jefferson County, said shoppers won't get excited about a sale offering 9 percent off, but they will get motivated by saving 9 percent in sales tax.

"It's something about getting free sales tax and sticking it the government that excites people," he said.

Gee, whose Pants Stores sell school uniforms, said one of his stores that had been open since 1962 recorded the biggest sales day in its history during the Saturday of last year's sales tax holiday week.

Aug. 3-5

For this year's weekend on Aug. 3-5, the state is waiving its 4 percent sales tax. In addition, more than 220 cities and counties are waiving all or part of their local sales taxes.

The waiver of the sales tax means customers can save up to 10 percent in some cities.

Items covered by the sales tax waiver are clothing priced at $100 or less, school supplies priced at $50 or less, books valued at $30 or less, and computers and computer equipment selling for $750 or less.

History

The Legislature started the sales tax holiday weekend
in 2006 to help parents with back-to-school purchases, but anyone can buy items covered by the sales tax waiver, said Nancy Dennis, spokeswoman for the Alabama Retail Association.

Alabama is one of 14 states that have sales tax holidays for clothing and school supplies. That includes three of Alabama's neighbors: Georgia, Florida and Tennessee.

State Revenue Commissioner Tom Surtees said tax-free holidays traditionally grow in popularity each year.

"Each year they get bigger because more people will be familiar with it," Surtees said Tuesday.

Surtees said he knew the first tax-free weekend was a success when he left his home near the Galleria shopping mall in Hoover and saw the mall parking lots full.

"It looked like a Christmas or Easter weekend," he said.

Despite waving the sales tax for the big shopping weekend, the state didn't suffer a drop in tax revenue. Instead, sales tax revenue rose 10.4 percent, according to the state Revenue Department.

Surtees said that's because the tax-free items get customers in the stores, but once there, they buy both tax-free and taxed items.

The Revenue Department's tax collection figures also show that the sales tax-free weekend didn't cannibalize sales in July and September. Gee, the marketing professor, said that like the state, his stores' sales weren't affected in July and September.

Success

Dennis said the success of the sales tax holiday weekend is proven by 30 cities and counties that didn't participate last year deciding to join in this year.

Bill Long, manager of the J.C. Penney department store in Jasper, said Jasper and Walker County didn't participate last year, and his store didn't enjoy the 30 percent to 40 percent increase in business that other Penney stores experienced throughout the state.

"It was a big deal for everybody but us last year," he said.

Long said Jasper and
Walker County are participating this year, and he expects his store to have a boost in business.

He said stores generally see an increase in tax-free and taxed sales during a sales tax holiday because most families try to do all their back-to-school shopping in a couple of trips and they buy everything on those trips.

On the Net

Participating cities and counties and rules for tax-free purchases:

Revenue Department, www.ador.state.al.us

Retail Association, www.alabamaretail.org

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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