[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.

                          ____________________