Retail stores across the state enjoy their annual back-to-school tax holiday sales bump this weekend. It will be their last for the foreseeable future.
Statewide tax reform from the recently completed legislative session eliminated 48 breaks in the tax code and lowered tax rates. The holiday, this year Friday through Sunday, did not survive the Republican-controlled General Assembly’s cuts. Last year, the tax break cost the state more than $13 million in revenue.
This weekend, computers, computer supplies, school supplies, sporting equipment, teaching supplies and clothing – all within price limits – are exempt from the 6.75 percent sales tax normally in effect in Wake County.
Opinions vary on the usefulness of the holiday, and studies show that the breaks given by many states simply move the timing of purchases more than they stimulate the economy. But there’s little doubt that consumers who took advantage of the holiday were the ones who benefited, while municipal and state revenues took a hit.
“I think that’s sad” that they’re ending the holiday, said Sharyn Lyles, a Garner mother of three elementary school students who buys during the holiday every year.
“They talk about helping the middle class, but this isn’t going to help them. I think you’ll probably find that the people who need the help are the ones out shopping.”
The conservative-leaning Tax Foundation issued a July 2011 study that concluded that the popular holidays fail to create economic growth and effectively amount to lawmakers arbitrarily picking winners and losers. The foundation argues that although sales taxes are regressive, granting meager tax relief to lower-income families accompanies far more dollars in relief to people who don’t need it.
In either case, retailers certainly don’t complain about the boost.
“The tax holiday definitely brings in an increase in traffic. It’s comparable to the holiday seasons,” said Tara Konya, store manager at Tommy Bahama at Crabtree Valley Mall.
She did allow that over the course of the month, numbers tended to even out.
While shoppers seemed almost universally aware of the tax holiday, most didn’t know the legislature had ended it.
“It’s the last one?” said Tuyen Le of Durham, who was shopping at Crabtree.
Le, like many shoppers, roughly fell under the shift-not-stimulate argument – not that an extra purchase doesn’t slip into the trip.
“We probably would have made the purchases anyway. But since we’re here, if there’s any extra deal, we may as well take advantage,” Le said.
One person who did know that the holiday is ending, Shayna Simpson-Hall, said eliminating the tax holiday was a mistake. States bordering North Carolina – Virginia, South Carolina and Tennessee – have not eliminated the practice.
A big purchase such as a computer – or even purchases for a family with enough kids to prepare for school – could result in enough savings to more than cover gas to get to a border, she said.
“I think it could be bad for the businesses in North Carolina,” Simpson-Hall said.