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State readies a sales-tax vacation

If a 6 percent price cut on clothes and shoes doesn't sound like a red-hot retail idea, just ask New Yorkers.

Florida legislators Thursday night were in the final stages of approving a measure to give shoppers in the state up to a week in August to buy clothes or shoes priced at up to $50 an item without paying the usual sales tax.

That's a savings of the state's 6 percent sales tax, plus any additional county-imposed sales taxes. Final passage of the legislation is expected today.

Florida borrowed the idea from New York, which first tried a similar no-sales-tax week on clothing and shoes in January 1997. The test was so successful that New York's governor this week signed a law that late next year ends the state's sales tax on any clothing and footwear items priced up to $110.

In New York, shoppers were hooked not by the amount of savings on their purchases, but by the more visceral pleasure of not paying taxes.

"It was like sanctioned tax evasion. People were nailing the government," said Ted Potrikas, vice president of the Retail Council of New York, a trade association and lobbying group in Albany. "This was a tax cut you felt every time you went to the cash register."

Tallahassee lawmakers who back the tax holiday measure in Florida and lobbyists for retailers hope for a similar response from Florida shoppers.

Like New York, Florida is pushing tax breaks for shoppers because the state is enjoying a budget surplus.

"It might sound odd, but we wanted to do something to help the Florida consumer, not the retailer," maintained Florida Retail Federation senior lobbyist John Rogers. His group of retailers asked only that certain provisions be included to assure that the advantages of the tax holiday outweighed the administrative hassles for shopkeepers of adjusting their pricing to leave off the tax.

The retailers pressed for the tax holiday to last at least several days or even a week to justify reprograming their computers for no-tax sales.

And they asked that shoppers be permitted to buy tax-free clothes and footwear items priced up to at least $50 and preferably $100 apiece. Shoppers could buy as many appropriately priced items as they wished tax-free during the designated days.

Florida legislators chose August for the proposed tax holiday, partly to peg the event to back-to-school shopping.

Since advising Florida on ways to set up a "tax holiday" on clothing and footwear, New York has also been approached by Michigan, Louisiana and other states for information.

State lawmakers may be on to something, suggests Dominic Calabro, president of Florida TaxWatch, a business-backed group that monitors public spending. Retailers that merely advertise a 6 percent sale won't cause much of a shopping stir, he said.

But if stores can promote the fact that the state's Department of Revenue will not tax a purchase, Floridians may respond like their peers in New York: with their wallets.

"It has a ring to it. It's an American tradition that people prefer not to pay taxes," Calabro said.