Tax-free holiday lures back-to school shoppers: Some question true value of annual ritual

Tax-free holiday lures back-to school shoppers: Some question true value of annual ritual

August 3rd, 2013 by Shelly Bradbury in Business Around the Region

Families shop for school supplies at Target on Gunbarrel Road on Friday, the first day of the weekend tax holiday.

Photo by Doug Strickland /Times Free Press.


Clothing - less than $100 per item

School supplies - less than $100 per item

Computers - less than $1,500 per item

SOURCE: Tennessee Department of Revenue

Jennifer Reeves browsed through the clothing section in Target on Friday to find school clothes for her three elementary-aged kids and hoped to save a little extra money.

She made the shopping trip this weekend to capitalize on Tennessee's sales tax holiday and is thrilled she won't have to pay the 9.25 percent sales tax for items on her shopping list.

"It gets expensive," she said at Target on Gunbarrel Road. "I'm not much of a shopper, but with three - you try to save where you can."

All in all, the sales tax break will save her about $20. Maybe $30. While the sales tax holiday often is hailed as a way for families to save money on back-to-school supplies, clothing and computers, some experts say the holiday doesn't save consumers much and doesn't boost the state's economy.

"In Tennessee, the sales tax holiday saved the average consumer $2.51 in 2006," said Christopher Koopman, program manager at the Mercatus Center at George Mason University. "It's an easy way for politicians to appear to be reforming the tax code for the consumer without doing any real work to do it."

Generally, the tax-free weekend is one of the busiest at Target, said Lacey Richmer, executive team leader of human resources. About 50 people, children and shopping carts crowded into the store's back-to-school section Friday morning.

"It's a lot busier than the normal weekend," she said. "I'd say it falls in second to the Christmas season. It's going to be like this all weekend, and Saturday will be busier."

But Koopman argued that the shoppers filling the aisles this weekend are making purchases they'd make anyway, andthey are just timing the shopping trip to coincide with the tax-free weekend.

"Sales tax holidays do not promote economic growth," he said. "Essentially they incentivise shoppers to delay or rush purchases to time them up with the holiday."

Tennesseans typically save between $8 million and $10 million in taxes every sales tax holiday, said Billy Trout, manager of communications for the Tennessee Department of Revenue. The state loses that revenue.

While consumers have to pay neither the local nor the state sales tax, the state reimburses municipalities for the local sales tax revenue lost during the holiday, Trout said.

He added that it's difficult to tell whether or not shoppers are spending more because of the tax break.

"Statistically, we don't know," he said. "Our sales taxes are reported on a monthly basis from each business, so we're not sure exactly what point in a given month the push was. There's no way to know. I can tell you that in talking with retailers, they say that business increases."

Target shopper Patrice Kilgore made the drive from North Georgia to take advantage of Tennessee's tax holiday to buy school supplies and uniforms for her 16-year-old daughter. She said she was buying items she'd have bought even without the holiday but thought the tax break is a good idea.

"I think it's awesome," she said. "Every little bit helps."

Contact staff writer Shelly Bradbury at or 423-757-6525.