It is hard to say whether merchants, or consumers, are happier about upcoming sales tax holidays in Georgia and Tennessee. The former hope it will ramp up sales in a difficult retail environment. The latter are delighted that the events will save money at a time when an uncertain economy has made them closely watch their pocketbooks. It's probably safe to say that both retailers and shoppers are tickled that some reprieve at the cash register will be available for a short period.
Georgia will observe the sales tax holiday Thursday through Sunday. Tennessee observes its tax holiday Aug. 7-9. There are variations in rules in the two states, but purchases of clothing, school supplies and computers -- within clearly stated limits -- generally are free of sales tax during the moratorium. The tax relief comes at an propitious time.
Back-to-school shopping is in full swing. Students in both states will be in class by the second week of August. Buying clothing and supplies for those students can be a strain on the pocketbook. The National Retail Federation says the average family with kids in kindergarten through 12th grade is expected to spend nearly $550 on back-to-school school merchandise this year. Families with college-bound students will expend more.
That can put a dent in even the most carefully calculated budget. The total could be a back-breaker for families hard-hit by job loss and the economic downturn. Even a short moratorium on sales tax for needed back-to-school items -- for clothing for growing children and for computers that are increasingly necessary in an educational setting -- can alleviate a small part of the burden.
The moratorium is undeniably popular. Thirteen states and the District of Columbia in addition to Tennessee and Georgia now observe sales tax holidays of some sort. And why not? It's pretty much a win-win situation. Merchants, who often extend hours and stage special sales, and shoppers have reason to be happy. So do politicians.
Most claim the holidays as their own, citing them as proof that they are doing something positive for their constituents. A few do argue that the tax moratorium, short as it is, hurts states by reducing the revenue stream. That's true to some extent, but the amount lost is relatively small given the size of a state's overall budget.
Even so, the future of tax holidays is uncertain. Continuing shortfalls in state budgets make the event difficult to sustain. The holiday, as long as it lasts, is welcome, but there is a more equitable way to provide consumers in a state like Tennessee with tax relief.
Tennesseans, particularly those of humble means, currently are victims of a tax system that forces them to spend a disproportionate share of income on sales taxes rather than on necessities for school and for every-day life. Meaningful tax reform, anathema to the Legislature, would ease that burden. It would bring relief to those struggling to make ends meet 52 weeks a year rather than on the one weekend a year provided by the sales tax holiday.
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