NEW YORK-Dealers are disappointed that Connecticut cut short its Energy Star tax holiday.
The Connecticut state legislature earlier this year enacted a bill creating a sales tax exemption for all Energy Star Appliances sold on or after June 4. The initial proposal called for the legislation to be effective for one year following enactment, which once passed was cut short to conclude on Sept. 30, a spokeswoman for the Connecticut Department of Revenue Service told HFN.
She said the decision to cut short the legislation may have been due to budgetary constraints caused by the expected loss of revenue.
John Leonardo, head of merchandising for local buying group Nationwide Connecticut, which represents 48 independent appliance dealers, said dealers were disappointed to see this program cut short "out of the blue" as it had a positive impact on high-efficiency white goods sales.
The legislation helped to further spark already-increasing consumer demand for energy-efficient appliances. "Dealers have adjusted floors to get more Energy Star pieces out there," Leonardo said. "It's been a boon for our business," he said, adding, "we've seen a shift in emphasis significantly on dishwashers and refrigerators that are Energy Star-based." He added that despite a somewhat soft room air season, Energy Star air conditioners sold very well. He declined to provide specifics on sales gains.
The increase in Energy Star sales means higher average ticket prices. "Energy Star means higher average price points," Leonardo said. "Energy Star is usually step-up, better-featured models," he added.
Adam Thomas, vice president of marketing at Nationwide Marketing Group, concurred, saying "traditionally Energy Star product will yield a better sale--generally higher selling prices.
"The elimination of sales tax levels the playing field," he added. "Our guys have set up floors to where they are almost all Energy Star."
The 6 percent price tag reduction due to the tax exemption has helped sway consumers to step up to a somewhat more expensive Energy Star unit, Leonardo said. While major appliance retail is no stranger to sales and various manufacturer and dealer rebates, Leonardo said these sales have not seemed to have had as great an impact as the tax holiday. "Ten percent sales don't have as much an impact as they used to--a lot of consumers are leery that a sale is not a sale," he said. However, tax breaks are perceived as clear and straightforward, he explained.
Nationwide Connecticut promoted the program via its monthly circulars and via point-of-purchase information at its dealers.
Leonardo said that Connecticut is the only state that has offered a long-term tax break on Energy Star appliances. -- Michael Rudnick