ALEX COHEN, host:
Times are tough for many Americans. Lots of people have cut back their shopping habits, and that's hurting retailers. This week, the National Retail Federation proposed one way to get customers back into stores, tax holidays.
Joining us now is the National Retail Federation's Rachelle Bernstein. Welcome to the program, Rachelle, and explain how these tax holidays would work.
Ms. RACHELLE BERNSTEIN (Vice President, National Retail Federation): We propose three national sales tax holiday periods in 2009. They would be 10-day periods, including two weekends, and they would occur in March, July, and October. During that time period, the federal government would reimburse the states for any sales tax holiday revenue lost because of these holiday periods.
COHEN: And do you have a sense of how much money this plan could save consumers?
Ms. BERNSTEIN: We estimated approximately $175 for the average family.
COHEN: And as you mentioned, the way that this would work is that the federal government would reimburse states for any losses that they might incur without the taxes during these periods. But could that work? Where's the federal government going to get that money from when they're already handing out to so many other industries?
Ms. BERNSTEIN: We submitted this proposal yesterday to President-elect Obama, his transition team, and congressional leaders. As you may know, right now, they are working on trying to develop an economic stimulus plan that they're hoping to enact early in 2009. We are suggesting that this be part of that plan.
The National Retail Federation's leadership thinks that we need a two-pronged approach for fiscal stimulus. We think that you need something to provide some long-term economic stimulus, such as investment in infrastructure, which is being suggested. But that type of stimulus has a long lead time.
We think that you also need something that's developed to provide some short-term economic stimulus. As you may know, consumer spending accounts for 70 percent of the GDP. So we think that if, through these sales tax holidays, we can do something to spur consumer spending, that that will get re-circulated through the economy and will have a positive effect in 2009.
COHEN: There are some states out there, for example Oregon and Maine, which currently don't have sales taxes throughout the year. Is there anything that you can potentially learn from states that have been doing this for a while?
Ms. BERNSTEIN: What we are looking at are states that have had sales - state sales tax holidays. As you may know, there are 17 states plus the District of Columbia that currently have sales tax holidays during the year. And the experience of our retail members with those holidays is that they're very attractive to people. They really do bring people into the stores. It's an exciting time.
You can say, well gee, if the average state sales tax is five, six percent, why would that drive consumers to come into the stores more than a sale advertised at 15 or 20 percent. And it's an interesting psychological phenomenon, but it does seem to drive more traffic. It may be because people just don't like to pay taxes, and they're very excited when there's a period where they won't have to pay taxes to the government.
COHEN: Rachelle Bernstein is with the National Retail Federation. Thank you, Rachelle.
Ms. BERNSTEIN: Sure thing.
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