WASHINGTON - D.C. is warning merchants that its annual August sales tax holiday has been canceled this year, according to a statement from the city's chief financial officer.

The elimination of the sales tax holiday is expected to bring in an estimated $640,000 in sales tax revenues. Maryland has also canceled its sales tax holiday this year, but Virginia has not.

Facing a $190 million budget shortfall, the city has its own money to save. "In these difficult economic times, every dollar is precious," said D.C. Council member Jack Evans.

Robin Bennett, whose dollars are equally precious, is not pleased by the news. "It means you have to bargain shop even more."

She is not alone when she says she may take her money out of D.C. and into Virginia, where the tax break remains. "I don't think it's a very good way to attract people to buy things in the District," said shopper May Selin.

If shoppers leave the city to shop, the council's plan may backfire as shoppers head across state lines to spend their back-to-school dollars.

In prior years, the August sales tax holiday provided a nine-day exemption from the 5.75 percent sales tax on purchases of clothing, accessories, shoes and school supplies for $100 or less.

The D.C. Council is also considering cutting its December sales tax holiday, which would save an additional $600,000.

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