About a dozen states are welcoming tax-free shopping in stores and online this month, most taking place during the Aug. 7-9 weekend.
SAN ANTONIO (CN) — While many parents won’t be sending their children off to school this fall, that isn’t stopping big-box stores and local boutiques in Texas from preparing for what they hope will be a busy tax-free holiday weekend as bargain shoppers welcome the annual tax moratorium Friday.
This year’s sales tax holiday on back-to-school supplies and clothing comes at an especially critical time for retailers who are slowly recovering from the effects of the Covid-19 pandemic, which brought with it a nearly two-month shutdown and new generation of crowd-leery shoppers.
“If I see lines or if I see that it’s packed, I’ll probably stay in my car and go home,” said Jessenia Garza, a San Antonio mother of two children under 10.
Unsure whether her kids will attend in-person classes or shift to virtual learning when their elementary school starts Aug. 17, Garza said she still wants them to be prepared with fresh supplies for a new school year.
And that means readying a shopping plan that will allow her family to take advantage of this weekend’s savings — even as Texas this week became the leading state in the nation for daily new coronavirus cases and new deaths.
“I think the best time for me to go would be Friday morning,” Garza said. “Come Saturday and Sunday when people are off it could be too crowded, too risky.”
Shoppers can expect to skip out on paying sales tax on items including clothing, shoes, school supplies and backpacks priced below $100 during Texas’ 21st tax-free holiday.
Almost a dozen other states are welcoming tax-free shopping in stores and online this month, most taking place during the Aug. 7-9 weekend, including Florida, Iowa and South Carolina.
Total spending for families with students in K-12 and college is projected to reach $101.6 billion, an increase from $80.7 billion last year, according to an estimate by the National Retail Federation. But the amount of foot traffic in what is traditionally one of the busiest shopping seasons of the year is anyone’s guess.
“By any measure, this is an unprecedented year with great uncertainty, including how students will get their education this fall whether they are in kindergarten or college,” said Matthew Shay, President and CEO of the NRF. “Most parents don’t know whether their children will be sitting in a classroom or in front of a computer in the dining room, or a combination of the two. But they do know the value of an education and are navigating uncertainty and unknowns so that students are prepared.”
Texas Comptroller Glenn Hegar, whose office oversees the collection of tax revenue owed to the state, said taxpayers saved an estimated $102.2 million as a result of last year’s suspension of sales taxes. He said his office could not estimate how much taxpayers could expect to save this year because of the unpredictability of consumer spending since March, when the virus took hold of the state economy amid shutdown orders and a rise in unemployment claims.
But there are already some encouraging signs that Texas’ retail sector is improving after Republican Governor Greg Abbott allowed for the phased reopening of stores and malls May 1.
Hegar announced this week that the state’s sales tax revenue in July was better than expected, totaling $2.98 billion, which represents a 4.3% increase compared to the same month last year. The majority of that revenue is based on a “surge in collections” from retail store sales in June.
Online spending also rose sharply as shoppers chose to avoid brick-and-mortar stores, Hegar said, adding that the 2018 Supreme Court decision in South Dakota v. Wayfair allowing states to enforce the collection of sales taxes from out-of-state businesses aided the collection.
“With about 1.3 million Texans with continued claims for insured unemployment and another 184,000 receiving benefits under the Pandemic Unemployment Assistance program in June, it’s likely that consumer spending was significantly supported by enhanced benefits provided by the federal CARES Act and related legislation enacted in response to the COVID-19 pandemic,” Hegar said. “With the expiration of these benefits at the end of July, consumer spending and sales tax collections may decline in coming months.”
Abbott mandated face coverings in public spaces in most Texas counties last month as cases of Covid-19 spiked dramatically in the Lone Star State after the Memorial Day holiday.
Shoppers this weekend can expect mask requirements inside dozens of chains across the country, including Macy’s, American Eagle and Gap stores. Big-box retailers like Academy, Target and Walmart are offering curbside pick-up on online orders as a way to promote social distancing.
And cashiers will most likely be separated behind plexiglass or other types of shields that have become the new normal in grocery stores, pharmacies and clothing boutiques nationwide.
But Hegar also reminded shoppers that they could still get their dose of retail therapy without leaving their home.
“Online shopping is covered, so I encourage all Texans to shop online or practice social distancing when making in-store purchases,” he said. “We want folks to stay safe while saving money.”