But tax policy wonks? Not so much.
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Is this good fiscal policy? Probably not. Is this money that could be better spent elsewhere by the state? Probably. But the tax holiday, at least from what appeared in interviews published in The Baltimore Sun, created something you don't see often these days — a happy consumer. And given all the dismal economic news and unemployment inching higher in Maryland, maybe a little happiness is worth the price.
The Tax Foundation, however, suggests otherwise. The Washington-based group reported last month that sales tax holidays in Maryland and 16 other states are "poor tax policy." And it raises some persuasive arguments.
These holidays, for example, don't stimulate economic growth because consumers are making purchases they would have largely done anyway at another time of the year.
More troubling, the foundation contends that some retailers raise their prices during the tax holiday because the demand for their goods increases with the jump in shoppers. There go customers' savings.
The tax holidays also favor some products — such as school supplies, clothing or sports equipment — over others, and that can discriminate against certain consumers, the foundation says. The elderly, for instance, likely have no need for school supplies, yet they deserve a tax break, too.
And if states really wanted to help residents, the foundation concludes, they would lower the sales tax that customers pay year-round.
On that last point at least, Patrick Donoho, president of the Maryland Retailers Association, agrees. But, given that the sales tax is Maryland's second-largest revenue producer, that's not likely to happen, he adds.
Donoho also counters that the Tax Foundation doesn't take into account Maryland's location. Pennsylvania next door doesn't charge a sales tax on most clothing, while neighboring Delaware doesn't have a sales tax at all.
"This tax-free week kind of jolts people or gets them back into their local store after the summer vacations," Donoho says. Otherwise, they "go to the beach and then go to Delaware."
The tax holiday also puts Maryland retailers on a level playing field — one week out of the year — with out-of-state online retailers that don't charge sales tax, Donoho says.
(Marylanders shopping online are supposed to pay the sales tax to the state if the retailer doesn't collect it, but many don't. The state estimates it lost $198.4 million in revenue in 2010 from online shopping.)
Donoho says he will be surveying his members soon to find out how they fared during the tax holiday, but early indications are that the week was a success.
Susannah Siger, owner of Ma Petite Shoe in Hampden, estimated late last week that her August sales were up 16 percent from a comparable period a year ago. Her store promoted the tax holiday on its website and through social media.
"If people didn't know about it beforehand, they're excited about it once in the store," Siger says.
"It's perfect timing for us. We do our summer clearance this time of year," Siger adds. Shoes that once might have been $200 were marked down below the $100 tax holiday threshold, she says.
Wee Chic, a children's clothing store at Green Spring Station, also reported a busier week than usual. Owner Bridget Quinn Stickline says many of her customers came in last week to specifically take advantage of the tax holiday.