Tax break for back-to-school shoppers could be suspended to help budget woes
Once again, the state is looking to save every penny it can to help alleviate its $27 billion shortfall.
This time, the legislature is taking an ax to the three-day sales tax weekend, a holiday that usually brings in big bucks and big crowds for stores.
House Bill 3790 would suspend the sales tax weekend for the next two years, in an effort to boost coffers.
Michael Davis, an economics and finance professor with Southern Methodist University's Cox School of Business, said should the state suspend tax free weekend, consumers would see no big changes in their pocket books.
"Everything would stay the same and lot less silly than it is right now," he said. "It is the most popular thing you can imagine and the dumbest. It's just bizarre when you think about what it does. It gives a tax break to people who buy on three special days and there's nothing special about the days or the people who shop on them. It's nonsense."
Davis said the weekend is supposed to be for back-to-school shopping but there are more items on the states exemption list. Some items, he said, have very little to do with school supplies.
Although retailers see a jump in sales during the three-day event, if the state suspended the program the same items would still be bought.
"You are going to buy socks, lunch boxes and underwear," he said. "Whether you buy them on those three days or weeks or months later they will still be purchased."
The state legislature is considering the suspension to help alleviate the amount of debt in the 2012-2013 budget, but Davis said the funds wouldn't make a big difference.
"Over three years it would be a total savings of $100 million," he said. "We're short on money. It's not a multi-billion dollar shortfall, but $100 million over three years isn't an enormous help. The state is basically looking for nickels under the couch."
Davis said the tax breaks should be suspended because, he said, it's a stupid tax rule.
"Shoppers will probably complain," he said. "People should be upset because the state is going to collect their money one way or another. The weekend is forcing people to shop at certain times. The last weekend before school begins most people would like to go on one last vacation. Instead, they are going to the mall but the tax break makes people think they have to shop."
George Henderson, manager of McKinney's Office Depot, said he sees highest sales during the months of July and August because of back-to-school shoppers.
"I don't think it would really hurt us that bad if the state suspended the tax free weekend," he said. "Places like Target and Wal-Mart might see a drop in sales, but people will be buying those supplies regardless. Our promotions during that time usually draw customers and would continue to do so regardless of the holiday weekend."
This year's tax-free weekend is scheduled for Aug. 19-21. For a complete list of exempt items, visit window.state.tx.us.
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