HAGERSTOWN — Maryland is dropping its sales tax on certain products for a week, an effort timed to coincide with back-to-school shopping.
Shop Maryland Week will be Aug. 14 to 20.
Qualifying apparel and footwear will be exempt from the state’s 6 percent sales tax.
The state held similar tax holidays for a week in 2001, five days in 2006 and a week in 2010.
Maryland Comptroller Peter V.R. Franchot, a Democrat, said Monday at Premium Outlets at Hagerstown that the tax-free week is a temporary reprieve for state residents.
In 2001, the state estimated that a tax-free week would cost about $6.7 million in tax revenue, but the actual loss was about $5.1 million, Franchot’s office said last year.
However, retail sales rose 10 percent, bettering the prediction of 7.4 percent.
Joseph Shapiro, a spokesman for Franchot, said the state estimated a tax loss of about $9 million for last year’s tax-free week, but the actual loss was about $18 million or $19 million.
The estimated tax-revenue loss for this year is $10 million, Shapiro said.
Franchot, though, said the double-digit boost to retail sales outweighs the loss.
Maryland Retailers Association President Patrick Donoho said Monday that retailers reported double-digit sales increases during the 2010 tax-free week, following a terrible 2009.
Maryland officials hope to lure out-of-state shoppers.
West Virginia and Pennsylvania have a 6 percent sales tax and do not have a sales-tax holiday planned this year. In Pennsylvania, however, clothing and textbooks are exempt from sales tax.
Virginia’s sales tax for many items is 5 percent. From Aug. 5 to 7, Virginia is dropping that tax on certain school supplies priced at $20 or less, and clothing and footwear priced at $100 or less.
Delaware has no state sales tax.
Several elected officials at the outlet center echoed Franchot’s call for people to shop during the tax-free week.
The group included four Republicans — Sen. Christopher B. Shank, Del. Neil C. Parrott, and Washington County Commissioners Ruth Anne Callaham and Jeff Cline — and Democrat Jason A. Malott, Washington County’s register of wills.
Last week, The Tax Foundation, a nonpartisan tax research group, posted its annual criticism of sales-tax holidays, saying they’re “based on poor tax policy and distract policymakers and taxpayers from real, permanent and economically beneficial tax reform.”
Tax holidays cause consumers to simply shift the timing of their purchases and lead some retailers to temporarily raise prices, The Tax Foundation alleged.
Shank said he, Del. Andrew A. Serafini and Del. Michael J. Hough are planning a broad look at the net effect of all tax credits and exemptions in Maryland.
“That’s a work in progress,” he said, and until then, he supports the popular sales-tax exemption week.
Parrott said it was a big mistake to raise Maryland’s sales tax from 5 percent to 6 percent in 2007. Lessening the tax burden, even for a week, is helpful, he said.
For more information about Shop Maryland Week, including a breakdown of which items will be exempt from sales tax, go to www.comp.state.md.us/ShopMD_2011/default.asp.