published Sunday, December 2nd, 2012

Taxes impact holiday prices

If you’re like most folks this time of year, you’re making a list and checking it twice, comparing prices between different stores and scouring the Internet, all in an effort to get the lowest prices on Christmas presents. And for good reason.

The average adult plans to spend $854 on gifts this holiday season, according to a survey performed by American Research Group, Inc. That means an average couple will see the total cost of their Christmas shopping list exceed $1,700.

You may not realize that one of the easiest ways to save big this holiday season could be to simply drive across county lines.

An analysis of the sales tax rates of every city and county in the Chattanooga Times Free Press circulation area found the sales taxes applied to retail purchases varied from as little as 5 percent to as much as 9.75 percent, depending on where you shop.

With the same stores (Wal-Mart, Target and Best Buy, for example) and the same prices, common to many towns in Southeast Tennessee, Northwest Georgia, Northeast Alabama and Southwest North Carolina, and so many retailers willing to match the price of their competitors, the only real way to save this holiday season might be to shop at stores in jurisdictions with low sales taxes.

The undisputed capital of bargain shopping, based on its low tax rate, is Dalton, Ga. Thanks to Whitfield County’s commitment to maintaining the lowest sales tax rate in North Georgia, shoppers in Dalton are rewarded with a substantial price break on every item they buy.

In Dalton, spending the national average of $854 on Christmas gifts costs $42.70 in taxes. The next cheapest place to shop in our area, Murphy, N.C., levies a sales take that bumps the price of holiday shopping up by an additional $14.95.

For some shoppers in Chattanooga, the 60 mile roundtrip drive to Dalton may seem like more trouble than it’s worth, especially if you don’t plan to spend hundreds of dollars on Christmas gifts. Most bargain hunters in Chattanooga would agree, however, that simply crossing the Georgia state line to save nearly a third on sales taxes is a good trade-off.

By shopping at the Wal-Mart a few miles away in Fort Oglethorpe, Ga., rather than a Wal-Mart in Chattanooga, you would save almost $20 on the average $854 holiday spending spree.

The Free Press analysis of sales tax rates found that, no matter what, you’ll pay less in sales taxes by doing your holiday shopping in Georgia, rather than in Tennessee or Alabama.

The cheapest places to shop in Northeast Alabama in terms of sales taxes — Fort Payne and neighboring Geraldine — have sales tax rates that are still a percent higher than the cities with the even the most expensive sales taxes in North Georgia.

Shopping in Tennessee is even more expensive. At 9 percent, Athens and Decatur have the lowest sales taxes of any Tennessee towns in the Times Free Press circulation area. Cleveland, Jasper, Benton, McMinnville, Dayton, Manchester and Sweetwater all share the embarrassing distinction of having the highest sales tax rates in our region. In those high tax towns, shoppers shelling out the national average in holiday spending will pay $83.27 in combined state and local sales taxes — $40.57 more than shoppers in Dalton pay for the same items.

Of course, as in years past, the easiest way to reduce your sales tax hit this holiday season might be to shop online. States have begun cracking down and implementing stronger procedures to enforce the collection of sales taxes by online retailers. If an online retailer has a physical presence in a particular state, it must collect sales tax from customers. So if you’re hoping to buy your kid a Furby on Walmart.com, rather than in the store, in hopes of sneaking out of paying sales taxes, you’re out of luck.

Even if a retailer doesn’t charge you taxes on a product you purchase online, you’re supposed to self-report the purchase to your state’s department of revenue and write a check to cover the amount of the sales tax. Of course, the number of people who actually do that is roughly equivalent to the number of people who willfully poke themselves in the eye with a stick.

If you’re not willing to risk going in front of a judge just to save a few bucks by buying a Holiday Barbie online and not paying applicable taxes, shopping in Dalton is the best bet for price-savvy holiday shoppers.

Dalton and Whitfield County should be applauded for their willingness to keep local sales taxes low. By purchasing your Christmas gifts in Dalton, you’ll be giving yourself the gift of the lowest sales tax rates in the Chattanooga area.

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nucanuck said...

Drewby-doo is obsessed with taxes. What a silly inconsequential posting.

December 2, 2012 at 10:53 a.m.
aae1049 said...

I had to buy a new major kitchen appliance, yesterday, and sales tax is not inconsequential. Adding 10 percent onto every purchase in Chattanooga is hard on families, in a city with a poverty rate of 28 percent (census data). That is why Chattanooga has to bribe business to locate here.

Inconsequential indeed, I have seen Hamilton County and City elected officials in North Georgia's Cosco. In fact, Mayor Littlefield, tax um high, was seen shopping in Cosco 2 months ago. Ask elected officials if they go to North Georgia to shop?

December 2, 2012 at 12:57 p.m.
AlmostAmanda said...

I get your point and agree about large purchases and the sales tax rate, aae. Costco might not be the best example, however, since one is not available here in Chattanooga. I, and a number of friends and relatives, go to Costco because we prefer it to Sam's (better products, better service, etc).

December 2, 2012 at 4:02 p.m.
rolando said...

After all those things are bought out of state solely to avoid Tenn sales tax, you should still pay Tenn the difference -- is it then called Use Tax, not Sales Tax. Amazon has notified all its Tenn customers how much Use Tax they owe Tenn for last year -- this is part of its "tax agreement" with Tenn...[they weren't required to tell Tenn how much each customer owes it in Use Taxes].

December 2, 2012 at 4:23 p.m.
EaTn said...

Tennessee depends on the regressive sales tax as there is no income tax. Folks, you can't have your cake and eat it too!

December 2, 2012 at 6:50 p.m.

I'm surprised that this editorial isn't waxing eloquent about actual tax burdens.

Wait, wait, no I'm not.

December 2, 2012 at 7:17 p.m.
Gidget said...

This is a great way to save my hard earned money during the holiday season - a time when money is already running short. Thanks TFP. I'll drive the short distance to Fort Oglethorpe to gather some of my presents this year.

December 3, 2012 at 9:50 a.m.
aae1049 said...

AlmostAmanda Cosco is an excellent example. I have lived here my entire life and going to Georgia to buy groceries each week is a local way of life long before Cosco.

December 3, 2012 at 10:32 a.m.
rolando said...

Is food taxed in Georgia, aae? Maybe its time to make the drive for the monthly goodies...I miss the military tax-free commissaries. AAFES online used to work also.

December 4, 2012 at 5:25 a.m.
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