Tax Holidays Spur Shopping Sprees

Several states are gearing up for back-to-school shopping with tax holiday programs designed to help taxpayers through a time of heavy spending and to give a boost to the local economy. The idea has been around for five years, ever since New York tried a tax holiday in 1997. Now several states have jumped on the before-school holiday bandwagon, offering sales tax amnesty on purchases of clothing, school supplies, and computers.

Florida, Maryland, and Pennsylvania at one time were participants in the tax-free program but have discontinued the practice this year as the state budgets feel the crunch of a tighter economy.

Although the actual dollar savings are not high, parents seem to appreciate the tax holiday more than they would an advertised sale of the same magnitude. "If stores advertise 6 percent off, consumers would say 'ho hum,' but there is something magic about a tax free holiday," said Craig Shearman, senior director at the National Retail Federation. "It goes back to the Boston Tea Party."

Participating states include:

  • Connecticut is offering a tax break on clothing and shoes priced at under $300 per item. The holiday is scheduled for August 18-24.
  • District of Columbia is offering a tax break on clothing and school supplies under $100 from August 9 through 18.
  • Georgia is offering a tax break on school supplies under $20, clothing and shoes under $100, and computers and computer accessories up to $1,500. The tax holiday will run August 2-3.
  • Iowa is offering a tax break on clothing and shoes under $100, August 2-3.
  • New York is offering a tax break on retail sales and restaurant meals under $500 in the Liberty and Resurgence zones of lower Manhattan from August 20-22.
  • North Carolina. Participating in the program for the first time this year, North Carolina is offering a tax holiday on clothing, shoes, and school supplies up to $100, sports and recreational equipment up to $50, and computers and computer equipment up to $3,500.
  • South Carolina will give a tax break on clothing, school supplies, and computers purchased August 2-4.
  • Texas provides a tax break on clothing and shoes under $100, August 2-4.
  • West Virginia, also enjoying its first year of tax holiday participation, will give a tax break on clothing, school supplies, and computer accessories up to $100 from August 2-4.

Residents of these states aren't the only beneficiaries of tax holidays. Many shoppers in border states cross state lines to purchase tax-free items. Stores in tax-free zones will offer extended hours as well as in-store sales to boost revenue. "It's one of our busiest weekends of the year," said Priscilla Thorne of Foley's department store in Houston.

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