WASHINGTON — Hopes for an economic boost fueled by this year's tax refunds could be dashed as most people say they plan to be frugal with their annual windfalls.
In previous years, tax refunds have helped increase retail sales in March, April and May by 12 to 20 percent over sales in February, Internal Revenue Service Commissioner Doug Shulman said Monday.
"The tax filing season is its own stimulus to the economy," Shulman said. "It helps kick off the spring shopping season and can help kick-start the economy."
The deadline for individuals to file their 2008 tax returns is midnight Wednesday. Fifty-seven percent of adults said they expect to receive a tax refund this year, according to an Associated Press-GfK poll released Monday, and 38 percent of those receiving a refund said they intend to spend at least part of it. But the spending appears to be mostly on basic needs: 17 percent said they would use the money for everyday needs such as food and clothing, up from 7 percent a year ago.
Among other findings:
• 54 percent of those receiving refunds said they plan to pay off credit card, utility, housing and other bills. That compares with 35 percent who said the same thing a year ago.
• 31 percent of those receiving refunds said they will use at least part of the money to pay credit card bills, compared with 17 percent a year ago.
• Only 5 percent, about the same as a year ago, said they plan to go on a shopping spree.
• 3 percentage of people plan to invest their refunds in real estate.
• 35 percent of those receiving refunds plan to save or invest at least part of the money, a slight increase from a year ago.
The IRS plans to send out more than $300 billion in refunds this year, Shulman said, with an average refund of about $2,700, compared with $2,500 last year.
The Obama administration is hoping this year's refunds will help boost an economy that has shed more than 5 million jobs since December 2007.
Congress passed a $789 billion economic recovery bill in February. The package was a mixture of government spending and tax cuts designed to get people to spend at a time when most are cutting back and saving more.
The poll was conducted April 3-7 and involved land line and cell phone interviews with 1,002 randomly chosen adults. The margin of sampling error is plus or minus 3.1 percentage points.