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Big-ticket items expected to star during sales tax holiday
By Kathleen Dayton
Staff Writer
It’s been only a few months since the state’s last sales tax holiday, but soon consumers will have a second chance to walk away from the cash register with tax-free purchases.
A one-time Thanksgiving Sales Tax Holiday is set for the 48-hour period beginning at 12:01 a.m. Nov. 24 and ending at midnight Nov. 25, the Friday and Saturday after Thanksgiving. The Thanksgiving holiday weekend is traditionally one of the busiest shopping times of the year.
The tax holiday differs from the annual sales tax weekend held in August, which began in 2000 and is geared toward back-to-school purchases. A number of items, such as jewelry, furniture and cosmetics, are not tax-exempt during the August event.
Come Thanksgiving, consumers can shop till they drop and save sales tax on everything, including jewelry, furniture and automobiles.
“It’s going to put a big push on big-ticket items is what I’m thinking,” said Noel Coker, manager of Reed’s Jewelers in Northwoods Mall.
The Thanksgiving weekend is normally a big volume weekend for the store, Coker said, but this is the first time he and his employees will have to prepare for the possibility of even more shoppers stepping out to take advantage of the tax savings.
“You can buy manufactured homes without paying tax, you can buy automobiles without paying tax, all kinds of stuff,” Coker said. “We’re kind of hoping people looking for bigger tickets will go ahead and drop the money.”
While the August tax holiday is truly a tax-free event, Thanksgiving weekend shoppers will be saving only the 5% state sales tax. Local option taxes are still required, as are accommodations taxes, said Catherine Reed, spokeswoman for the S.C. Department of Revenue.
In Charleston, shoppers will still pay 1.5% on purchases. Dorchester County shoppers will pay a 1% transportation tax and Berkeley County shoppers will pay a 1% local option sales tax.
The November tax holiday was an integral part of a tax relief plan signed in June by Gov. Mark Sandford, Reed said. The bill authorizes a referendum that will enable counties to put a cap on property tax reassessments. It also will raise the state sales tax to 6% in June 2007, while it lowered the sales tax on groceries to 3%, effective Oct. 1.
Fiscal impact studies compiled by the S.C. Board of Economic Advisors estimates $10 million in savings for the state’s taxpayers during the Thanksgiving sales tax holiday. Comparatively, shoppers have saved about $3 million each year during the annual sales tax holiday in August, Reed said.
Charleston County taxpayers saved more than $280,000 in the August event, spending more than $5.6 million, Reed said. Berkeley County taxpayers saved more than $84,000 and spent nearly $1.7 million, while Dorchester County taxpayers spent nearly $493,000 and saved more than $24,000 in sales taxes.
Rebecca Gosnell, marketing director for Mount Pleasant Towne Centre, said enthusiasm for the August event has worn off since it began in 2000. The November event would be most effective for merchants who combine their own discounts with the tax savings, she said.
“A 20 percent-off sale without the sales tax becomes a 25 percent-off sale,” Gosnell said. “That’s when it affects the customers to alter their shopping behavior.”
Gosnell said the retail economy overall was in the dumps in August, probably because of high gas prices. Now that gas prices have relaxed, the economy has strengthened and it looks like consumer confidence is rising, she said.
Local automobile dealerships hope the upcoming sales tax holiday will perk up what is traditionally a slow month for car sales. The state caps sales tax on automobiles at $300, but dealers think saving that much tax is enough to motivate shoppers.
“People are always looking to save as much as they can,” said Marion Clayton, general manager of Bilton Chevrolet Pontiac GMC in St. George. “If they can save an extra $300 and put that together with current incentives and rebates, it will help.”
Robert Crews, general manager and owner of Saturn of Charleston, said any savings would be a plus and help raise consumer confidence.
Leslie Riley, marketing manager for Northwoods Mall, said she was surprised the state would choose one of the biggest shopping weekends of the year to exempt sales tax.
“They’re going to lose a lot of money,” Riley said. “I don’t know how many people know about it, either. I know our merchants are prepared, because we have gone over it with them. If the word gets out a little more, it will be good.”
Leigh Burnett, marketing manager for Citadel Mall, said shoppers would normally be out in full force during Thanksgiving weekend anyway, but should still be happy to take advantage of a 5% savings on every purchase.
“It isn’t going to be the prime motivator for that weekend, but for people that want appliances and big-ticket items, it certainly will be a great incentive,” Burnett said.
Furniture retailers in the area will be participating in a tax holiday for the first time.
“This is a big time in our market,” said Rick Cooper, vice president of Southeastern Galleries. “It’s when people make a lot of home furnishing purchases to update their homes for the holidays, so I think it’s wonderful timing for the furniture industry. Hot dog, this is awesome.”
Kathleen Dayton is a staff writer for the Business Journal. E-mail her at kdayton@charlestonbusiness.com.
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