August means the ka-ching of cash registers ringing up back-to-school items and while shoppers are expected to shell out $18 billion on school clothes and supplies this year, more than a dozen states won’t get a cut.
Connecticut, Florida and Texas are among 15 states giving families a break from paying sales tax on certain school-related items this month under temporary “state tax holiday” programs.
The programs vary widely. Shoppers in Louisiana and Massachusetts had two days this month to make purchases up to $2,500 and not have to pay the 4 percent and 6 percent state sales tax respectively. Florida shoppers had 10 days to get a 6 percent tax break on clothing with a sales price of $50 or less and school supplies with a sales price of $10 or less.
Some states like Georgia and Virginia have added energy efficiency products to the mix while Florida in June shelved the state sales tax for hurricane supplies and equipment.
Sales tax holidays are popular among shoppers and politicians. “It’s a way to give tax relief in a highly visible way,” Harley Duncan, executive director of the Federation of Tax Administrators said. He said the number of states offering the holidays have slowly increased over the years because they are so popular.
Idea Decried
Many tax experts, however, say the programs don’t make good tax policy. “Sales tax holidays are political gimmicks,” economist Curtis Dubay of the Tax Foundation said. “They are a cheap way for politicians to score points with working families.”
Sales tax holiday also can be a bureaucratic nightmare for small businesses. A Wal-Mart likely will have no problem complying, but a mom-and-pop operation that has 10,000 items on the shelf will have to figure out which items are exempt.
