Although the majority of tax returns have already been filed and the IRS reports that the average tax refund is higher this year, don't expect that to translate into a surge in consumer spending in your store as it may have in the past, according to the National Retail Federation (NRF).
According to the NRF 2005 Tax Returns Consumer Intentions and Actions Survey, conducted by BIGresearch, only one in seven consumers (13.7 percent) plan to wait until April 15 to file their taxes this year, and most of them (64.5 percent) filed in January or February. The survey also found that more than two-thirds of consumers (67.3 percent), or 147.7 million people, expect to receive a tax refund this year.
However, unlike last year, the survey found that nearly half of those who expect a tax refund plan to use the check to pay down debt (49.9 percent), while more than one-third plan to put some of the money into savings (39.0 percent). Some consumers also plan to use a portion of their refund for everyday expenses (24.1 percent), vacation (13.4 percent) or a major purchase (9.1 percent).
Though it may seem surprising, the survey said it is the young adults that are the most likely age group to pay down debt, with 59.6 percent of 18 to 24 year olds planning to use a portion of their return to pay down credit cards and other debts, up 8.9 points over last year.
As for the gender breakdown, no surprise here as women are almost twice as likely as men to use some of their refund on a major purchase (11.5 percent versus 6.5 percent).
The Internal Revenue Service has announced that the average tax return as of March 19 was $2,259, up 6.2 percent from $2,128 last year at that time.
The NRF 2005 Tax Returns Consumer Intentions and Actions Survey polled 6,366 consumers Feb. 2-9, 2005. The consumer poll has a margin of error of plus or minus 1.0 percent.