Snowe revives plan for sales tax holiday

WASHINGTON – As congressional leaders continued butting heads over an economic stimulus package, Sen. Olympia Snowe and several like-minded colleagues renewed their push Friday for a “National Sales Tax Holiday.”

Snowe said during a press conference that if the federal government sponsored a 10-day moratorium on all state and local sales taxes around the country, shoppers would be encouraged to spend more money with an eye on real savings at the cash register.

“This is as close to a sure thing as you can get when it comes to boosting sales and stimulating the economy,” Snowe told reporters.

If signed into law, the sales tax holiday would be voluntary among states and local governments.

In Maine, both the Legislature and the governor would be needed to support the idea by approving a temporary waiver of the statewide sales tax of 5 percent. Under the legislation, the federal government would reimburse states for any tax revenue losses as well as expenses incurred for administering the tax holiday.

Snowe estimates that the total cost to the federal treasury would be $6.5 billion.

Sen. Patty Murray, D-Wash., and Snowe first unveiled their sales tax proposal on Oct. 31 with high hopes of Congress quickly passing it into law and the measure taking effect on the day after Thanksgiving. Those hopes were dashed as congressional leaders became deadlocked in partisan battles over a multi-billion dollar economic stimulus package.

In the meantime, momentum for the sales tax holiday is growing, with 16 senators now officially co-sponsoring the measure and many more from both parties expressing their support. A similar House provision is also gathering steam.

Now backers believe a sales tax holiday could take place sometime early next year, perhaps in conjunction with tax rebate checks that may be approved as part of a final stimulus package.

A number of economists have praised the sales tax proposal, including conservative Arthur Laffer. He labeled it as the “best short-term tax stimulus idea” he has seen in ages.

The measure would not only put savings in the pockets of consumers, it would reward people when they buy, Laffer said in a recent Wall Street Journal editorial. That in turn will spur job growth and production, he predicted.