The critics include reputable sources such as the Tax Foundation, which does research on taxation on the federal, state and local levels.
The foundation says sales tax holidays such as South Carolina’s this weekend are poor policy, costing states revenue while providing little benefit.
More policymakers are recognizing this less-than-desirable tradeoff, the foundation says. South Carolina is one of 16 states to use sales tax holidays for 2017, down from a peak of 19 states in 2010.
Findings of a new Tax Foundation report:
• Sales tax holidays create additional tax compliance costs, but larger businesses tend to lobby for the holidays as a form of free advertising.
• Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating among products and across time, and distorting consumer decisions.
• While sales taxes are somewhat regressive, this does not make sales tax holidays an effective tool for providing relief to low-income individuals. In order to give a small amount of tax savings to those with lower incomes, holidays give a large amount of savings to higher-income groups as well.
• Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief. If a state must offer a “holiday” from its tax system, it is an implicit recognition that the state’s tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round.
While many may agree that sales taxes are due an examination and the state’s system has issues, they will not buy into the negative aspects of the tax holiday for back-to-school purchases.
There are good reasons locally for both buyer and seller to support the tax-free weekend.
Orangeburg is hungry for industrial development that will bring jobs — and is equally primed to see business growth in the retail and restaurant sectors.
Census numbers that are so critical to development decisions made by firms which have thousands upon thousands of choices in places to locate do not adequately tell the local story. The micropolitan area of which the City of Orangeburg is at the center is surrounded by a large county and surrounding counties that will support more business if given the opportunity.
One way people locally can boost the marketing effort is shopping at home. Successful retailers and restaurants are themselves a marketing tool. This tax-free weekend brings an opportunity to shop at home for one of the busiest retail periods of the year.
During the sales tax holiday, shoppers benefit from the exemption of the 6 percent state sales tax and local taxes on the purchase of school supplies.
To understand how important the weekend is for retailers, consider that the tax-free weekend has become the third-busiest shopping period of the year, surpassed only by the weekends after Thanksgiving and before Christmas.
Parents will go back-to-school shopping regardless, but the tax holiday attracts cash-strapped shoppers who have delayed purchases.
And even if you don’t need school clothes, you can save money shopping during the sales-tax holiday. And you can find some great deals.
South Carolina shoppers typically save approximately $2-3 million over the course of the tax-free weekend. While larger markets such as Columbia and Charleston will get their share of the business, it is vital for the prospects of growth in Orangeburg and The T&D Region that local people prove businesses here can thrive.
It makes sense to spend money locally, where the economic growth promoted by the dollars will directly benefit quality of life. The boost in sales this weekend is important for retailers and the savings are welcomed by shoppers.