Poll results: Taxpayers more frugal with refunds

WASHINGTON – Most people say they plan to use this year’s tax refund to pay bills, deciding in this sour economy to be more frugal with their annual windfall.

Fifty-four percent of those receiving refunds said they intend to pay off credit card, utility, housing and other bills, according to an Associated Press-GfK poll released Monday. That compares with 35 percent who said the same thing a year ago.

Only 5 percent, about the same as a year ago, said they planned to go on a shopping spree.

The survey found that 38 percent of those receiving a refund said they plan to spend at least part of it. But the spending appears to be mostly on basic needs: 17 percent said they would use the money for everyday needs such as food and clothing. It was 7 percent a year ago.

Phillip Barks of Aberdeen, Md., said he and his wife, Kristy, have spent their $3,800 refund. Most went toward a credit card bill.

“We didn’t pay that off, though,” said Barks, 31, who serves in the Army. “We just put a big dent in it.”

The Barks, who were not part of the poll, were interviewed on a downtown street in Washington.

A few blocks away, Shannon Wyss of Washington said she plans to save most her $1,066 refund. She will, however, treat herself a bit- she’s already spent $99 on a device for her iPhone.

“I need a pair of shoes,” said Wyss, 36, who works for the National AIDS Fund.
The deadline for individuals to file their 2008 tax returns is Wednesday. As of last week, the Internal Revenue Service had sent out about $200 billion in tax refunds. Commissioner Doug Shulman said the agency expects to send out about $330 billion by the end of tax season.

The AP-GfK poll found that 57 percent of adults said they expect to receive a tax refund. The average refund this year is about $2,700, compared with $2,500 last year, Shulman said.

The Obama administration is hoping this year’s refunds will help boost an economy that has shed more than 5 million jobs since December 2007. Congress  passed a $787 billion economic recovery bill in February. The package was a mixture of government spending and tax cuts designed to get people to spend at a time when most are cutting back and saving more.

It makes sense to be frugal when the economy is in such bad shape, but it hurts the economy when everyone does it.