Despite state budget troubles, more states than ever are embracing sales tax holidays, which aim to please back-to-school shoppers even as they draw criticism from economists.
Illinois will offer tax-free shopping this month for the first time, bringing to 18 the number of states that suspend sales tax on designated days, up from 16 states in 2009 and seven in 2000.
The end of summer is the most popular time for tax holidays: 15 states will suspend sales taxes this month.
"For once in their life (consumers) get an opportunity to buy something without the government marking it up," says Mississippi state Sen. J. Walter Michel, a Republican who sponsored the bill that initiated the tax holiday in 2009. Mississippi held its second tax-free shopping weekend Friday and Saturday, dropping the 7% state sales tax on clothes and shoes priced under $100. "I'm going to go buy some blue jeans and socks and underclothes," Michel said last week.
Mississippi, like other states, had to make deep cuts to balance its budget for fiscal year 2011. "I'm much more concerned about the consumers saving a little money on their purchases than the (loss) in state revenue," Michel says. The final tab on a pair of $44 men's Levi's at J.C. Penney in Jackson, for instance, would not include the $3.08 sales tax.
In Massachusetts, a bill to offer sales-tax-free shopping in August is awaiting the governor's signature.
As much of an anti tax guy as I am, I hate these programs because they bastardize the normal flow of commerce.
Why go out and buy a pair of jeans today when you can go out in a couple of weeks and buy them. It just makes it harder for companies to manage their operations.
If enough people do that, how does a business adequately order goods and services?
Here's an idea. how about making your sales tax so low, people will come to your state to buy product all the time?