[Congressional Record Volume 147, Number 153 (Wednesday, November 7, 2001)]
[Senate]
[Pages S11550-S11552]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
[[Page S11550]]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mrs. MURRAY (for herself, Ms. Snowe, Mr. Lieberman, Mr.
Santorum, Mr. Dorgan, Mr. Thurmond, Mr. Durbin, Mr. Craig, Mr.
Cleland, Mr. Bond, and Mrs. Feinstein):
S. 1643. A bill to provide Federal reimbursement to State and local
governments for a limited sales, use and retailers' occupation tax
holiday; to the Committee on Finance.
Mrs. MURRAY. Madam President, I rise today along with my colleagues,
Senator Snowe, Senator Lieberman, Senator Santorum, Senator Dorgan,
Senator Thurmond, Senator Durbin, Senator Craig, Senator Cleland,
Senator Bond, and Senator Feinstein, to introduce the Sales Tax Holiday
Act of 2001.
Our economy needs a shot in the arm. The GDP is declining, consumer
confidence is at a 7-year low, and consumer spending has slowed to its
lowest level in 8 years. But consumer spending is just what we need to
get our economy going again. In fact, two-thirds of our economy depends
on consumer spending.
Today, we are proposing an innovative way to get Americans back into
stores and to get our economy back on its feet. What we are proposing
is a national sales tax holiday, a 10-day period where every American
can shop without having to pay a State sales tax.
The national sales tax holiday will save one money on everything from
cars and computers to books and baby clothes. It will boost retail
sales and consumer confidence, and it will help everyone in the retail
chain, from assembly line workers and truck drivers to shelf stockers
and sales people.
This national sales tax holiday we are proposing is immediate. Every
American can take advantage of it. It will not break the bank, and it
will directly stimulate our economy by boosting sales and supporting
retail, transportation, and manufacturing jobs throughout our entire
country.
Many businesses rely on the holiday season to make it through the
year, and many workers count on those retail jobs before the holidays.
Our bill will help both. Even before September 11, this was shaping up
to be a very difficult time for retail businesses and the thousands of
workers they employ. This sales tax holiday will give our economy a
shot in the arm and will give families a break when they need it the
most.
Our bill sets the date of the tax holiday from November 23 to
December 2. That is the traditional start of the holiday shopping
season. Many Americans are looking for ways to support our country.
With the sales tax holiday, we can help jump-start our economy by
buying things for school, for work, or for home.
It is all so easy. You do not have to wait for a check. You do not
have to fit into a certain income tax bracket. You buy what you need,
you put someone to work, you give our country a boost, and you save
money.
Seven States, plus the District of Columbia, have used these sales
tax holidays, and they have had great results. Under our approach, the
Federal Government will reimburse States for the lost sales tax
revenue. Right now we estimate the cost to be about $6.5 billion,
depending on how many States participate and how strongly consumers
respond.
Under our plan, every penny of the $6.5 billion will go directly into
the economy.
In the coming weeks, the Senate will debate legislation to stimulate
the American economy and to help workers who have lost their jobs as a
result of the economic downturn. The final product needs to stimulate
additional economic activity. It needs to boost consumer confidence and
spending. It needs to encourage business investment and job creation.
It needs to address the needs of workers and their families who have
lost their jobs. It must maintain a commitment to fiscal discipline and
the long-term economic health of this Nation. And it should help return
the country to a sense of normalcy.
I believe the legislation I am introducing today with Senator Snowe
can be an important part of a balanced economic stimulus package.
First, our proposal will stimulate economic activity and consumer
confidence. States and businesses that have participated in sales tax
holidays reported an increase in sales during their sales tax holiday.
Most importantly, businesses have found that consumers do not just
shift their spending to the holiday period, but these holidays create
new spending that would not have otherwise occurred.
Second, our proposal will stimulate business investment and job
creation. Retail businesses will need to boost inventories to prepare
for larger crowds. That is good news for manufacturers, distributors,
and other businesses that help meet consumer demand for all kinds of
products.
Third, it benefits all Americans. Low, middle, and upper income
people all pay sales taxes on the products they buy, and since the
sales tax is the most regressive kind of tax, lower income consumers
will benefit the most.
Our proposal is fiscally responsible. This tax holiday will last for
no more than 10 days in any State and, therefore, there are no
exploding costs in the long term.
Our proposal does not negatively affect State and local budgets.
Here, in fact, is how the States will get reimbursed: Every State that
participates in the holiday will receive a quick payment of their
estimated lost revenue. Before the tax holiday, a State can decide if
it wants to be reimbursed for the exact amount of its loss. Then after
the tax holiday, those States would go through a reconciliation process
with the Federal Government.
We need a sales tax holiday. The economic slowdown and other factors
are having a tremendous impact on the ability of State and local
governments to provide critical services and to help working families
who have been hurt by higher unemployment. That is why I have worked
very hard to make sure that the Federal Government will fully
compensate the States that take advantage of this holiday. In addition,
our plan is optional so States can choose to opt in if they want to
stimulate their own economy.
Even without Federal incentives, seven States and the District of
Columbia have already used sales tax holidays to help working families
buy school clothes, computers, and to stimulate economic activity.
This will help return this country to a sense of normalcy. Our
Nation, and each of our lives, have been changed forever by the events
of September 11. We can never go back to September 10. Those events
reminded us how fragile life is. They reminded us of everything for
which we have to be thankful--our family, our friends, our faith, our
communities, and our democracy. But as we celebrate these important
things during the upcoming holiday season, I believe it is important
that we not feel guilty about getting back to business and to our daily
lives.
President Bush has urged all of us in the wake of the September 11
attacks to return to our daily lives and get back to business. I
believe this legislation will help us get the Nation back to business.
It is fair, it is responsible, it will help families, and it will
stimulate our economy.
I urge my colleagues to support including it in the economic stimulus
package.
I ask unanimous consent that the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1643
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Sales Tax Holiday Act of
2001''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Consumer confidence and spending is critical to a
healthy United States economy.
(2) In order to prevent a further decline in consumer
spending, which fell 1.8 percent in September 2001, and
consumer confidence, which is at its lowest level since
February 1994, the Federal Government needs to provide an
immediate and targeted tax incentive to encourage consumer
spending.
(3) The most immediate and targeted incentive for
consumption would be to reduce the price of goods to
consumers, which can be done most effectively by removing
sales taxes imposed on those goods.
(4) A 10-day sales tax holiday, prior to the 2001 Holiday
season, would encourage Americans to make immediate purchases
and help to counteract the decline in consumer confidence
Americans have experienced since September 11, 2001. The
direct boost to consumption resulting from a sales tax
holiday
[[Page S11551]]
would enhance the benefits of individual tax cuts provided by
any Federal tax stimulus legislation.
(5) A State and local sales tax holiday would allow all
taxpayers to benefit, especially lower-income Americans who
spend a larger portion of their income.
(6) To encourage a State and local sales tax holiday, the
Federal Government should ensure that each participating
State and local government receives fast and fair
reimbursement for lost sales tax revenue.
(7) Florida, Texas, Pennsylvania, South Carolina, Iowa,
Connecticut, Maryland, Ohio, North Carolina, and the District
of Columbia currently provide consumers with similar
temporary sales tax holidays. Consumer response to these
holidays has been extraordinary, with retailers reporting
greatly increased foot traffic in stores as well as an
increase in incremental retail sales.
SEC. 3. STATE AND LOCAL SALES TAX RELIEF FOR CONSUMERS.
(a) In General.--The Secretary shall reimburse each State
for the amount of State and local sales tax payable and not
collected during the sales tax holiday period.
(b) Determination and Timing of Reimbursement.--
(1) Predetermined amount.--Not later than December 20,
2001, the Secretary shall pay to each State an amount equal
to the sum of--
(A)(i) the amount of State and local sales tax payable and
collected in such State during the same period in 2000 as the
sales tax holiday period, times
(ii) an acceleration factor equal to 1.73, plus
(B) an amount equal to 1 percent of the amount determined
under subparagraph (A) for State administrative costs.
(2) Reconciliation amount.--Not later than February 20,
2002, the Secretary shall pay to each electing State under
subsection (c)(2) an amount equal to the excess (if any) of--
(A) the amount of State and local sales tax payable and not
collected in such State during the sales tax holiday period,
over
(B) the amount determined under paragraph (1)(A) and paid
to such State.
(c) Requirement for Reimbursement.--The Secretary may not
pay a reimbursement under this section unless--
(1) the chief executive officer of the State informs the
Secretary, not later than November 15, 2001, of the intention
of the State to qualify for such reimbursement by not
collecting sales tax payable during the sales tax holiday
period,
(2) in the case of a State which elects to receive the
reimbursement of a reconciliation amount under subsection
(b)(2)--
(A) the chief executive officer of the State informs the
Secretary and the Director of Management and Budget and the
retail sellers of tangible property in such State, not later
than November 15, 2001, of the intention of the State to make
such an election,
(B) the chief executive officer of the State informs the
retail sellers of tangible property in such State, not later
than November 15, 2001, of the intention of the State to make
such an election and the additional information (if any) that
will be required as an addendum to the standard reports
required of such retail sellers with respect to the reporting
periods including the sales tax holiday period,
(C) the chief executive officer reports to the Secretary
and the Director of Management and Budget, not later than
January 31, 2002, the amount determined under subsection
(b)(2) in a manner specified by the Secretary,
(D) if amount determined under subsection (b)(1)(A) and
paid to such State exceeds the amount determined under
subsection (b)(2)(A), the chief executive officer agrees to
remit to the Secretary such excess not later than February
20, 2002, and
(E) the chief executive officer of the State certifies that
such State--
(i) in the case of any retail seller unable to identify and
report sales which would otherwise be taxable during the
sales tax holiday period, shall treat the reporting by such
seller of sales revenue during such period, multiplied by the
ratio of taxable sales to total sales for the same period in
2000 as the sales tax holiday period, as a good faith effort
to comply with the requirements under subparagraph (B), and
(ii) shall not treat any such retail seller of tangible
property who has made such a good faith effort liable for any
error made as a result of such effort to comply unless it is
shown that the retailer acted recklessly or fraudulently,
(3) in the case of any home rule State, the chief executive
officer of such State certifies that all local governments
that impose sales taxes in such State agree to provide a
sales tax holiday during the sales tax holiday period,
(4) the chief executive officer of the State agrees to pay
each local government's share of the reimbursement (as
determined under subsection (d)) not later than 20 days after
receipt of such reimbursement, and
(5) in the case of not more than 20 percent of the States
which elect to receive the reimbursement of a reconciliation
amount under subsection (b)(2), the Director of Management
and Budget certifies the amount of the reimbursement required
under subsection (b)(2) based on the reports by the chief
executive officers of such States under paragraph (2)(C).
(d) Determination of Reimbursement of Local Sales Taxes.--
For purposes of subsection (c)(4), a local government's share
of the reimbursement to a State under this section shall be
based on the ratio of the local sales tax to the State sales
tax for such State for the same time period taken into
account in determining such reimbursement, based on data
published by the Bureau of the Census.
(e) Definitions.--For purposes of this section--
(1) Home rule state.--The term ``home rule State'' means a
State that does not control imposition and administration of
local taxes.
(2) Local.--The term ``local'' means a city, county, or
other subordinate revenue or taxing authority within a State.
(3) Sales tax.--The term ``sales tax'' means--
(A) a tax imposed on or measured by general retail sales of
taxable tangible property, or services performed incidental
to the sale of taxable tangible property, that is--
(i) calculated as a percentage of the price, gross
receipts, or gross proceeds, and
(ii) can or is required to be directly collected by retail
sellers from purchasers of such property,
(B) a use tax, or
(C) the Illinois Retailers' Occupation Tax, as defined
under the law of the State of Illinois,
but excludes any tax payable with respect to food and
beverages sold for immediate consumption on the premises,
beverages containing alcohol, and tobacco products.
(4) Sales tax holiday period.--The term ``sales tax holiday
period'' means the period beginning after November 22, 2001,
and ending before December 3, 2001.
(5) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(6) State.--The term ``State'' means any of the several
States, the District of Columbia, or the Commonwealth of
Puerto Rico.
(7) Use tax.--The term ``use tax'' means a tax imposed on
the storage, use, or other consumption of tangible property
that is not subject to sales tax.
Ms. SNOWE. Madam President, I rise today with Senator Murray and our
other colleagues to introduce the Sales Tax Holiday Act of 2001.
Since last Wednesday, when Senators Murray, Lieberman and I first
publically raised the idea of a national sales tax holiday, this
exciting and innovative concept has truly taken root. Indeed, the idea
of a sales tax holiday has been supported by economists and editorial
writers alike and from all across the political spectrum--from Alan
Blinder, former Vice Chairman of the Federal Reserve Bank to Grover
Norquist, President of Americans for Tax Reform. So we are talking
about a bipartisan bill with support as wide as it is deep.
And one thing everyone agrees on is that our National Sales Tax
Holiday legislation offers the ultimate economic stimulus, literally
feeding Federal stimulus dollars directly into the economy. We believe
that this direct approach is perhaps the most immediate, fair, and
responsible approach that will have the most stimulative effect on the
economy.
With December fast approaching, we need to give a ``shot in the arm''
to our economy and help restore the confidence of consumers, because we
have seen a dramatic and negative reaction to the events of September
11. In fact, the Conference Board's first report on consumer confidence
since the attacks showed the steepest two-month drop since the 1980
recession--and confidence has plummeted to the lowest level in 7 years,
since 1994, even as consumer spending dropped 1.8 percent in September,
the first decline in 2\1/2\ years and the biggest spending drop since
1987.
According to a survey released yesterday by the Credit Union National
Association and the Consumer Federation of America, almost one-third,
28 percent, of those surveyed plan to spend less this year than last.
With the economy already on the brink of a recession following the
attacks--including economic growth actually declining 0.4 percent in
the third quarter--a one-third decline in spending this season could be
detrimental.
Clearly, we need to take action to restore this confidence in the
economy, and tell consumers that ``Help is on the way.'' As Lynn
Franco, director of The Conference Board Consumer Research Center said
recently, ``Widespread layoffs and rising unemployment do not signal a
rebound in confidence anytime soon. With the holiday season quickly
approaching, there is little positive stimuli on the horizon.''
Indeed, the signs are ominous. According to the National Governors
Association, dollar Christmas sales may actually fall below last year--
which
[[Page S11552]]
would be the first decline since Christmas of 1953, in the wake of the
Korean War.
Our Sales Tax Holiday Act of 2001 will provide that positive stimuli
at a critical time when consumers need the help most. Holiday sales
make up one-fifth, 22.8 percent, of annual consumer spending, so we
will target our bill directly toward these sales. States that opt to
participate by rolling back their sales tax will be ``held harmless''
for their decisions, with reimbursement made by the Federal Government
for lost sales tax revenue. This revenue will be replaced on a timely
basis so that States' cash flows are not affected, with States opting
to be reimbursed for lost revenue based on a formula which is based on
historical December sales tax revenue, or opting to receive dollar for
dollar reimbursement based on actual sales. States will have to choose
which method of reimbursement they would like to receive prior to
implementation of the sales tax holiday.
Forty-five States, and the District of Columbia will be eligible to
participate in our plan, with an estimated overall economic impact of
about $6.5 billion for the 10-day sales tax holiday. Needless to say,
no State would be required to take action, but we think they deserve to
have the option.
This is a proven approach that can dramatically boost sales. When
Maryland and the District of Columbia tried sales tax holidays last
August, for example, monthly sales jumped by 10 percent. One retailer
even saw sales jump 35 percent over the same period a year ago. And the
Wall Street Journal in 1997 reported that a survey of 102 stores in the
New York City metropolitan area averaged 125 percent increases in sales
during the region's January sales tax holiday on most clothing and
footwear.
The fact is, this is an approach that fulfills every one of the
principles for a stimulus that the Centrist Coalition I cochair laid
out earlier this month. And as the Los Angeles Times reported on
October 12, ``in the view of many economists--conservative as well as
liberal--most plans fall short of the key criteria for stimulus
proposals: they should take effect quickly, promote new spending or
investment that otherwise would not occur, and do no long-term
damage.''
Our plan fits the bill and makes perfect sense--and will pay off for
consumers with more dollars and cents in their pockets. What better
signal of holiday cheer and confidence than to include a savings on
every purchase, enticing consumers back into the stores and giving a
much-needed boost to our economy?
As we approach this holiday season, rather than being ``a day late
and a dollar short'' in helping consumers and stimulating the economy,
we should pass this legislation and give America the gift of an
immediate boost to our economic strength and well-being.
I thank the Chair.
______
By Mr. CAMPBELL:
S. 1644. A bill to further the protection and recognition of
veterans' memorials, and for other purposes; to the Committee on
Veterans' Affairs.
____________________