WHAT’S EXEMPT
During Tennessee’s back-to-school tax holiday, the following items are exempt from sales and use tax:• Clothing with a price of $100 or less per item.• School and school art supplies with a price of $100 or less per item.• Computers with a price of $1,500 or less per item.Source: Tennessee Department of RevenueDuring Georgia’s back-to-school tax holiday, the following items are exempt from sales and use tax:• Clothing (including footwear) with a sales price of $100.00 or less per item. The exemption excludes clothing accessories such as jewelry, handbags and umbrellas.• Computers, computer components, and prewritten software purchased for noncommercial home or personal use with a sales price of $1000 or less per item.• School supplies purchased for noncommercial use with a sales price of $20.00 or less per item.Source: State of Georgia
Tennessee's back-to-school sales tax holiday starts Friday, thanks to state legislation that moved the event to the last weekend in July, which means it overlaps Georgia's sales tax holiday that starts Saturday.
Before this year, Tennessee's sales tax holiday ran during the first weekend in August, which is when Alabama has its three-day back-to-school tax holiday in cities that choose to waive sales taxes.
State Sen. Joey Hensley, of Hohenwald, Tenn., about 90 miles southwest of Nashville, said he sponsored legislation that changed the date in Tennessee because school is starting sooner - not to compete with neighboring states.
"I had lots of constituents talk to me about it and complain that school had already started by the time the [August] weekend came, and they'd like to be able to buy school supplies and clothes before school started," Hensley said. "Other states did not factor in at all. As a matter of fact, I didn't know Georgia [and Alabama] had one."
Tennessee's three-day tax holiday from Friday to Sunday is longer than Georgia's two-day event on Saturday and Sunday - and more generous.
Tennessee waives taxes for computers with a price tag of up to $1,500, and for school supplies and clothing that cost $100 or less. Georgia's sales tax holiday has some limits lower than Tennessee's - $1,000 per computer and $20 per item for school supplies - with the two states tied at $100 per item of clothing.
"I think it gives Tennessee a little bit of a leg up," said Nate Roach, general manager of the Best Buy on Gunbarrel Road near Hamilton Place mall.
The annual tax holiday is one of the biggest days of the year for Best Buy, he said, mainly because people come to buy computers, including Apple MacBooks and other computers that cost more than $1,000 but less than $1,500.
"It is literally second to Black Friday," Roach said, referring to the Friday after Thanksgiving. "It is pretty wild."
Susan Bass, co-owner of Colony 13, a locally owned boutique at Northgate Mall that just celebrated its 40th birthday, expects a good turnout this weekend.
"It's a little bit earlier this year, so I'm expecting it to be big," Bass said, who thinks back-to-school shoppers will home in on her store's "Simply Southern" and "Life is Good" T-shirts.
While Tennessee and Georgia hold statewide back-to-school sales tax holidays, Alabama's three-day event is only in cities that choose to waive taxes. Near Chattanooga, that includes Scottsboro, Ala., which is home to Unclaimed Baggage, a destination retailer of used clothing, electronic devices and other items.
Consumers may flock to sales tax holidays, but the events have their critics.
Some say they they're a giveaway to corporate retailers who don't have to cut prices, since customers' savings come from not paying sales tax.
Another criticism is that tax holidays merely get consumers to hold off on purchases they would make anyway - such as new computers - until the tax holidays roll around, depriving states of revenue.
Seventeen states, primarily in the Southeast, stand to lose more than $300 million in tax revenue because they waive sales taxes on back-to-school items and other goods, including hunting gear, energy-efficient appliances and severe weather preparedness, according to the Institute on Taxation and Economic Policy, a nonprofit, nonpartisan research organization with offices in Washington, D.C., North Carolina and Wisconsin.
"Policy makers tout sales tax holidays as a way for families to save money. On the surface, this sounds good," ITEP said. "However, a two- to three- day sales tax holiday for selected items does nothing to reduce taxes for low- and moderate-income taxpayers during the other 362 days of the year.
"Sales taxes are inherently regressive. In the long run, sales tax holidays leave a regressive tax system unchanged, and the benefits of these holidays for working families are minimal."
Contact staff writer Tim Omarzu at tomarzu@timesfreepress.com or www.facebook.com/MeetsForBusiness or Twitter @meetforbusiness or 423-757-6651.