Thursday, December 10, 2009

Sales Tax Holidays

Sales tax holidays are events, usually over a weekend, but sometimes longer, when some items are exempt from tax. They are usually in August (back-to-school time) and include most clothing. These August holidays often include back-to-school supplies and computers too.

There are also holidays for guns in a couple of states (SC and LA last I looked) - they're called "Second Amendment" holidays.

And there are Energy Star holidays when you can buy energy-saving appliances tax free, and hurricane sales tax holidays. One state has a sales tax holiday on just about everything!

Sales tax holidays seem to be a regional kind of thing. They're mostly in the east and southeast with only one that I can think of in the midwest, and a couple in the west.

States are getting nervous about them. Sales tax holidays are a major crunch on state budgets. And, in these times of falling sales tax revenues, they are not looked upon too kindly by your friendly elected representatives. They like to brag about the holidays, but they hate to give up the money.

And I personally wonder if they work? They're often lauded as increasing sales, but are sales increased over the entire season, or does the holiday just force more sales into a few days, forcing retailers to stock up, pay overtime, reprogram their systems, etc?

Sometimes they snag business from other states, with shoppers coming from neighboring jurisdictions for the deals. But since those shoppers have to pay use tax* when they return home, what's the point? Oh, yeah (finger snaps). The politicians who complain about out of state vendors not charging tax on shipments into their state are perfectly happy to more-or-less do the same thing to the other states. Either that, or your legislators just don't know about use tax issues (which is more likely).

You can't miss sales tax holidays. If you live in a state with a sales tax holiday and you watch the news at all, you'll know when they come up. These are just the kinds of things that reporters will cover. And they can understand it. Sort of.

*yeah, right

Sales Tax Guy

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