August 27, 2009
Reuters Blog Highlights Tax Foundation Sales Tax Holiday Study
"Check Out Line: Sales Tax Holidays a Political Gimmick"
By Ben Klayman
Check out a study that calls sales tax holidays poor tax policy.
With a number of states wrapping up back-to-school sales tax holidays, the Tax Foundation, which describes itself as a nonpartisan organization that monitors fiscal policy at the federal, state and local levels, called such exemptions "nothing more than political gimmicks that do little to help consumers."
The Tax Foundation said such "holidays," which the group said amount to a 4 to 7 percent price reduction for consumers for only a brief period, simply favor certain industries over others and increase tax code complexity. In some cases, some retailers simply raise prices during a "holiday," effectively absorbing the benefit, the group said.
"If a state must offer a 'holiday' from its tax system, it's a sign that the state's tax system is uncompetitive - something that must be addressed with permanent reform," Tax Foundation staff economist Mark Robyn said in a statement.
