Tulsa World: Report doubts tax-free effects

MAKE US YOUR HOMEPAGE | Wednesday, February 10, 2010 | WIRELESS

Home > News > Article

Newspaper View Print this story

Comment

RSS

Bookmark

Report doubts tax-free effects
A monitoring group says tax holidays do not promote growth.

By BARBARA HOBEROCK World Capitol Bureau
Published: 8/28/2009 2:24 AM
Last Modified: 8/28/2009 3:35 AM

OKLAHOMA CITY — Some lawmakers disagree with a report that called sales-tax holidays a political gimmick.

The Washington, D.C.- based Tax Foundation this week released a report that is critical of the 16 states that offer sales-tax holidays.

The nonpartisan, nonprofit group that has monitored fiscal policy at the federal, state and local levels since 1937.

Oklahoma has had a sales-tax holiday for three years. This year's holiday, Aug. 7-9, exempted clothing and shoes priced at less than $100 from state, county and city taxes.

Last year, Oklahomans saved about $6.4 million during the three-day tax holiday, said Paula Ross, a spokeswoman for the Oklahoma Tax Commission.

The Tax Foundation's report called tax holidays "a gimmick" that distracts "policymakers and taxpayers from real, permanent, and economically beneficial tax reform. Their creation came about as a way to avoid addressing the negative effects of high sales taxes."

The study said sales-tax holidays do not promote economic growth or significantly increase consumer purchases.

Some retailers increase prices, essentially absorbing the benefit and reducing buyer savings, according to the Tax Foundation.

"Politicians claim that sales-tax holidays largely pay for themselves through increased economic activity and new collections," the Tax Foundation said. "But experience shows the claim of economic stimulus, increased revenue and consumer savings are greatly exaggerated."

Most sales-tax holiday shoppers see a modest windfall for something they would have bought anyway, the study found.

Oklahoma Sen. Jay Paul Gumm, D-Durant, a strong supporter of the state's sales-tax holiday, disagrees with the report's findings.

"I would invite this group to speak with the thousands of Oklahoma families who saved millions of dollars during the back-to-school sales-tax holiday," he said. "Perhaps then they might have a real-world view of what this policy means to real people and the budgets of real families."

Gumm does not believe that Oklahoma retailers increased prices for the sales-tax holiday.

"In most communities, retailers run specials to coincide with the sales-tax holiday, providing even greater savings for families," he said. "It also helps level the playing field for the middle- and low-income families by reducing the most regressive tax at one of the times of year when families spend the most."

Senate President Pro Tem Glenn Coffee, R-Oklahoma City, said the sales-tax holiday keeps revenue in Oklahoma as opposed to Texas, which also has a sales-tax holiday.

"It is about regional competition in this economic downturn," he said. "It helps promote the economy."

Barbara Hoberock (405) 528-2465
barbara.hoberock@tulsaworld.com By BARBARA HOBEROCK World Capitol Bureau

Newspaper View Print this story

Comment

RSS

Bookmark

Reader Comments

Show: Most Recent Comment First

Add your comment

7 comments have been made on this story so far. Tell us what you think below!

Reporting Comments

If you see a comment that violates our terms and conditions, please help us by clicking the "Report this Comment" link next to a comment. That will alert the web staff to review the comment. Thank you. -- Web Editor Jason Collington

Some reader comments for this story were copied from "Report calls sales-tax holidays a political gimmick," which was published on 8/27/2009.

	Report Comment not your friend 2,,,, missy, no thanks (8/28/2009 12:06:37 AM) Oh really,he does not believe that retailers raise the price of their merchandise around tax exemt day ha?Then why the heck do they make their employees work late changing price tags ha?
	Report Comment Angry Citizen!, Bluejacket (8/28/2009 8:24:29 AM) Too bad those greedy politicians still tax your groceries.
	Report Comment Travis, Tahlequah (8/28/2009 12:46:43 PM) Time for the Fair Tax so we no longer have to worry about such gimmicks.
	Report Comment CWG, Tulsa (8/28/2009 6:52:09 PM) not your friend 2,,,,missy no thanks,I bought Levi's that weekend priced less than the last ime I checked. Glad they changed the price tags.
	Report Comment CWG, Tulsa (8/28/2009 7:13:05 PM) If received your paycheck at one window and paid the deductions at the next window you would notice how much you are giving to the freeloaders The Tax Foundation is lying, people purchase more when they don't pay the goveronment for purchasing.
	Report Comment westernok, Fairview (8/29/2009 10:10:53 AM) Cities rely on food tax to offer services to the citizens. Take that away and what do the cities do to replace that tax? or do cities just scale back the services? Travis says it's time for a fair tax, what type of tax is that?
	Report Comment Norm, (8/29/2009 11:28:59 AM) westernok - there are PLENTY of states out there that are doing just fine providing basic services without a tax on groceries. In fact - the states that have the greatest economic expansion over the past decade, are the ones without ANY personal income tax. The states that are HURTING? The ones with the highest income tax rates.

Add Your Comment
In order to post a comment on this article, you must sign in to Tulsaworld.com. If you do not have a site account, you can create an account for free.