Sales tax holidays make structure fairer

JACKSON, Miss. -- Consumers will hit Mississippi stores soon to take advantage of the annual state sales tax holiday.

Shoppers won't pay the 7 percent tax on shoes and clothing priced under $100 per item. Tax will still be charged on many items, including jewelry, backpacks and specialized sports shoes such as soccer cleats.

The leader of the sales tax holiday movement, former state Sen. Walter Michel of Jackson, said he's pleased that many retailers have gotten into the spirit. Many are offering 50 percent to 70 percent off covered items as they compete for shoppers.

Republican Michel lobbied his colleagues for 10 years to set the sales tax holiday. The Legislature passed it in 2009.

Tax-free days were seen as a way to help people with back-to-school shopping. In times of sputtering economies, lawmakers and business owners hoped the holiday would get reluctant shoppers to pry open their wallets.

This year's holiday is July 31-Aug. 1. Many Mississippi schools will begin the first week of August.

Describing it as a back-to-school tax holiday prompts confusion among shoppers, Michel said.

"School supplies were never in the legislation," he said. "The idea was to provide something so all shoppers would benefit and not limit it."

Michel said he believes the holiday brings more people into cities and towns, especially from Louisiana, Tennessee and Arkansas to take advantage of the tax break.

Michel said he originally planned for a tax holiday to run Friday through Sunday. He said the late Sen. Bill Minor of Holly Springs, who was then chairman of the Finance Committee, took Sunday sales out of the legislation.

"He was from a small town and his merchants didn't want to have to work on Sundays," Michel said. "I had worked on it so long I was amenable to any amendments that got the legislation passed for Mississippi retailers and consumers."

Michel said it may be time for lawmakers to revisit the law and add school supplies and other items.

In 2014, legislators set a sales tax holiday for guns, ammunition, archery equipment and some hunting supplies. The "Second Amendment Weekend" is the first Friday of each September and runs for three days, through Sunday.

Nineteen states conduct some sort of sales tax holiday, according to the National Council of State Legislatures. North Carolina rescinded its tax holiday in 2013.

While people such as Michel tout the benefits of tax-free shopping, the Institute on Taxation and Economic Policy in Washington, D.C., believes sales tax holidays are poorly targeted, providing tax breaks to the wealthiest taxpayers and offering less assistance to the elderly or families without children who don't have back-to-school needs.

The institute also said many low-income taxpayers spend most or all of their money on necessities, which means they have less disposable income than wealthier taxpayers. They also may not have the luxury of shifting the timing of their purchases to coincide with a two- or three-day sales tax holiday.

However, advocates, say sales tax holidays make a state's tax structure fairer, spur economic activity and come with little cost to the states in terms of revenue and administrative difficulties.

In Tennessee, this year's sales tax holiday is Aug. 7-9. Shoppers can purchase clothing and school supplies tax-free up to $100 or computers up to $1,500.

In Arkansas, the sales tax holiday is Aug. 1-2. Shoppers can purchase school supplies and clothing up to $100 tax-free.

In Louisiana, the sales tax holiday is Aug. 7-8. Shoppers won't pay the sales tax on up to $2,500 worth of personal property for nonbusiness use.

An AP news analysis

Editorial on 07/26/2015

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