Whether youre a college student, a family with school-age children or simply a tech junky looking to get the latest laptop, the states annual three-day sales tax holiday has evolved over the years into a welcome excuse to go on a summertime spending spree.
But this years holiday, which begins after midnight Friday, will be the states last. A casualty of the recent tax overhaul that was signed into law last week, the holidays elimination is likely to alter both the spending habits of some consumers and the budgets of retailers who typically ramp up staffing in order to handle the increase in traffic.
Its the second busiest shopping period of the year, said Andy Ellen, president of the North Carolina Retail Merchants Association. December is a two or three week cycle of sales, whereas every citizen is eligible to go out and take advantage of the sales tax holiday. Youre able to go out for just that one weekend, and for retailers, its the only weekend youre on a level playing field with Amazon or Overstock.
The holiday cost the state an estimated $13.6 million last year, and is expected to cost about $13.4 million this year, according to the N.C. Department of Revenue. It was one of 48 tax breaks out of more than 300 on the books that were eliminated as part of the tax legislation, which cuts both corporate and personal income tax rates. The bill also eliminates the states Energy Star tax holiday, which exempted the energy-efficient appliances from sales taxes.
Supporters of the tax changes say the lower rates will more than make up for the money consumers save and retailers earn during the holiday.
Each and every taxpayer in our state will have more money in their pockets day-to-day, Rep. David Lewis, a Harnett Republican and a sponsor of the tax code legislation, said in an email. The reduction in personal income taxes more than offsets one-time savings obtained during promotional sales tax holidays.
During the holiday, school supplies, clothing items under $100 and certain electronics are exempt from state and local sales taxes. North Carolinas sales tax rate is 4.75 percent, and local taxes vary by county. Wake County levies an additional 2 percent sales tax on purchases, and Orange and Durham counties levy an additional 2.25 percent tax.
The holiday has become particularly popular among the Triangles legions of college students and their parents, who have seen costs rise in part by the need for laptops and other pricey electronics. College textbooks are often just as expensive as some electronics.
Anthony Sanders, director of the book division of N.C. States bookstores, said many students wait to purchase books and other class material during the tax-free weekend. N.C. State is one of several universities that process preordered textbooks during the holiday in an effort to save students money.
Instead of getting one giant rush of orders a few days after classes begin, it gives us a couple of bumps so we can do inventory and order fulfillment in August and then get another rush, Sanders said. Last year, between computers and textbooks and all other products that were tax-exempt, we saved students around $200,000 in taxes alone.
Sanders said N.C. State will probably offer its own savings events when the tax-free holiday expires next year.
Well want to do something to ease the burden of attending college, he said.
Families with school-aged children will spend about $634 on back-to-school items this year, down from about $689 last year, according to the National Retail Federation. If all of those items qualified for tax-free checkout, parents would save about $43.
Though parents are expected to spend less than they did last season, the price of school supplies has risen considerably within the last several years. Average spending jumped from about $549 to $606 in 2009 and has remained above $600 ever since.
Pat Bailey, a Raleigh resident, waited for last years tax holiday to purchase a new computer.
I spent more than $600, so I saved a considerable amount in taxes, she said. If parents purchase a computer for $1,000 during the tax-free weekend, they may save nearly $70.
Alison Weinreb, a Raleigh resident, said both she and many of her friends have used past sales tax holidays to save on supplies and clothes.
I think it will make it harder for some people, she said. I think there are a lot of people who try and take advantage of the savings, so this will probably be a disappointment to many.
While the crowded parking lots and lengthy checkout lines speak to the popularity of the sales tax holiday, some consumers side with the legislature in its decision to eliminate it.
Its supposed to be for the kids, but so many people just take advantage of it to buy stuff for themselves, said Stan Huey, a Cary resident. Why should the state just give a tax holiday?
Cross the border?
At least 16 other states offer sales tax holidays during the back-to-shopping season, including South Carolina, Tennessee and Virginia. Ellen, the Retail Merchants Association president, expressed concern that some consumers especially those who live near the border will do some of their back-to-school shopping out of state.
The revenue the state loses as a result of the tax holiday equates to increased revenue for many retailers. Since it was implemented in North Carolina in 2002, the annual holiday has evolved into a major sales event rivaled only by the winter holiday shopping season.
That weekend kicks off a strong buying season for us, said Bo Moran, store team leader at the Target in North Hills. Those back-to-school lists get longer and longer, so its mainly the back-to-school items people come in for, but some come in specifically for electronics.
The states Retail Merchants Association recently launched a campaign to rally public support for the reinstatement of the holiday.
Moran said while the tax holiday has been great, he doesnt expect consumers to stop buying many of the items they stock up on.
I believe some of our guests really look forward to that weekend, but it doesnt impact our entire buying season, he said. I think our sales will still be there, perhaps just more spread out. From a retailers perspective and a parents perspective, our guests are going to buy the items at some point anyway.