Financial Update – Tax Holidays Could Help Retailers
- May 26, 2009
Various tax holidays got under way over the Memorial Day weekend, or will get under way shortly, possibly giving a nudge to retail sales in some places. In Texas, for example, Memorial Day weekend was the second annual Energy Star sales tax holiday, with certain Energy Star rated appliances qualifying for tax-free status, such as air conditioners, refrigerators, ceiling fans, light bulbs, clothes washers and dishwashers. In Virginia, the Hurricane Preparedness Sales Tax Holiday begins May 25 and runs to May 31. During that period, there will be no state or local taxes on a variety of items associated with getting ready for hurricanes, such as generators priced under $1,000, or more everyday purchases such as duct tape or flashlights. In Michigan, there’s talk of an over bigger sort of tax holiday, one that would exempt new car purchases from state and local sales taxes, but only for cars actually made in Michigan. No official action has been taken on this particular trial balloon, however. Another kind of tax break is brewing in North Carolina, not for retail sales, but an attempt to encourage computer and gizmo maker Apple to undertake some industrial development in the state. In particular, the development of an Apple server farm that might ultimately represent a $1 billion project. Daily Tech, quoting a state lawmaker who preferred not to be named, said that the state tax break could be as much as $300 million over the life of the project. The deal isn’t unprecedented. Google Inc. opened a $600 million server farm in western North Carolina earlier this year, and will receive $260 million in tax breaks for its trouble over the next 30 years. Problems with the commercial real estate sector appear to be world-wide, if the latest from India is any indication. On Monday, the Reserve Bank of India told state and central cooperative banks that they “should desist from financing the commercial real estate sector,” according to a statement from RBI, which is the country’s central bank. “Further, taking exposure in sensitive areas would not be in the interest of short term cooperative credit structure,” the central bank said, which if nothing else shows that central banks speak the same language of understatement the world over. India has been in the thrall of a commercial real estate boom concurrent with its booming economy in recent years, with properties (condos in particular) in some parts of the country (Mumbai, Delhi, and other cities) trading at internationally high levels–a bubble, perhaps, though the RBI is staying away from that term. Wall Street had an up day most of the time on Friday ahead of the long weekend, but ended down slightly. The Dow Jones Industrial Average dropped 14.81 points, or 0.18 percent, while the S&P 500 lost 0.15 percent and the Nasdaq was down 0.19 percent.