Retailers love the sales tax holiday. In 2012, merchants racked up $330 million in sales.
But according to a report from the Tax Foundation, a Washington-based public policy think tank, sales tax holidays actually do little to stimulate new economic activity. Consumers merely put off planned purchases until the holiday weekend to reap the tax advantage.
“Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief,” the report states. “If a state must offer a ‘holiday’ from its tax system, it is a sign 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.”
Given a choice between a sales tax holiday and letting lawmakers extract another $24.6 million from our wallets, we’ll take the holiday every time.
But we’d rather see a real policy debate over the relative economic advantages and disadvantages of the sales tax. Sadly, that kind of political courage or forward thinking just doesn’t exist on Beacon Hill.