It's Christmas in July for retailers.
With school starting back this month for most students across Georgia, families are busy with the annual tradition of back-to-school shopping.
Off to the mall to find a pair of shoes to fit their son's rapidly growing feet. Packages delivered to their doorstep with a new wardrobe for their high school student. A trip to the store to stock up on pens, paper and notebooks.
The total combined planned spending for back-to-school and back-to-college shoppers for 2019 is expected to hit $80.7 billion, according to the National Retail Foundation. The group estimates that families of school-aged children plan to spend an average of $696.70, an increase from $684.79 last year. Families with college-aged students are predicted to spend even more — $976.78, which is up from $942.17 in 2018.
While cash registers are busy ringing up these purchases, many of those transactions across the country don't include sales tax due to back-to-school sales tax holidays. Rules vary by state for the sales tax holidays, but generally shoppers don't pay state or local sales taxes on items such as clothing, school supplies and computers that cost less than an established amount.
In Tennessee, for example, shoppers pay no sales tax on clothing $100 or less, school/school art supplies $100 or less or computers $1,500 or less. The sales tax respite is offered to all shoppers, meaning you don't have to be a resident of the state to enjoy the savings.
Sixteen states offer a back-to-school sales tax holiday. Every state that borders Georgia — with the exception of North Carolina — has a back-to-school sales tax holiday during July or August. Our neighbors to the west in Alabama also have a severe weather preparedness sales tax holiday where items such as weather alert radios and batteries are exempt.
But in the Peach State, the sales tax holiday no longer exists. Our state's last sales tax holiday was in 2016, and it went away with a whimper. There hasn't been a huge outcry to reinstate the back-to-school sales tax holiday, which must be approved by the state legislature.
Critics of sales tax holidays claim they only shift consumer spending rather than create purchases that weren't already planned. Sales tax holidays are little more than gimmicks, and instead of focusing on true tax reform politicians enjoy the pats on the back from consumers who save money on school-related purchases, they contend.
Sales tax holidays also have a drain on state coffers. The Georgia Budget & Policy Institute reported in 2015 that the sales tax holiday cost the state treasury "around $40 million a year and local governments another $30 million." The Tax Foundation, a nonprofit group based in Washington, D.C., has studied the costs/benefits of sales tax holidays extensively.
“Sales tax holidays introduce unjustifiable government distortions into the economy without providing any significant boost to the economy," according to the organization. "They represent a real cost for businesses without providing substantial benefits. They are also an inefficient means of helping low-income consumers and an ineffective means of providing savings to consumers.”
Popular opinion often sways politicians to promote bogus legislation. Lawmakers, with their eyes trained on re-election, float sales tax holidays because the public loves saving money and the finds the idea of not paying a tax — legally — enticing.
We urge our politicians not to fall for the hype of the sales tax holiday and search for ways to give us real, lasting tax relief.