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Tax holiday not a gimmick

Doesn’t the state of Wisconsin need an economic boost in these tough times to provide welcome tax relief for working families and stimulus to the state’s economy? How can this happen?

State legislators are working right now on legislation to do just that by way of a sales tax holiday the first weekend of August on back to school items.

Assembly Bill 108 was introduced by Rep. Chad Weininger, R-Green Bay, and Sen. Rick Gudex, R-Fond du Lac, and would create tax free shopping for back to school items including clothing, computers and school supplies in addition to a tax free weekend in November for Energy Star rated appliances. Nineteen states currently provide sales tax holidays.

Not only would consumers get a tax cut — studies show that revenue collections to the state are not negatively impacted due to increased economic activity surrounding tax holidays. States with sales tax holidays have experienced overall higher sales tax collections, because in their experience, the sales of taxable items grew as much as 50 percent while non-taxable items grew by 35 percent during the tax holidays. In addition, sales tax holidays result in increased workforce and labor income as well as an increase in overall tax collections.

An independent study of Florida’s 2011 sales tax holiday found that the holiday created $115 million in new economic activity, and that sales tax revenue in Florida actually increased by $7 million as a result of the increased economic activity.

A Wisconsin sales tax holiday would encourage customers from surrounding states to come to Wisconsin to not only shop, but also spend their money at our restaurants, hotels and tourism attractions. Illinois residents that come to the state would not be charged 9 percent on back to school items purchased in Wisconsin that weekend like they would have been in their home state. And Wisconsin residents would have incentive to shop locally instead of heading across the border to Minnesota where clothing is tax-free year-round.

It is easy to see why so many other states have been passing sales tax holiday laws; they have resulted in needed tax relief for working families, more jobs and stimulus to the economy and an overall increase in state tax collections. This is not a “gimmick” as some critics have argued. It is about time Wisconsin’s working families getting some much needed tax relief. Please contact your legislators and urge them to pass AB 108 to create a sales tax holiday for back to school items.