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Florida offering tax `holiday’ for back-to-school shoppers

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With computers returned to the discount list, Florida retailers are readying for back-to-school shoppers this weekend during the state’s sales-tax “holiday.”

The holiday, which will run Friday through Sunday is a large part of a tax-cut package (HB 7109) that lawmakers passed this spring. The package is projected to provide $91.6 million in tax breaks during the budget year that started July 1.

James Miller, a spokesman for the Florida Retail Federation, said the tax holiday is “much needed at this time of year,” as families buy clothes, supplies and other items before school starts.

“Families are going out and stocking up anyways,” Miller said. “Being able to save 6, 7, 8 percent is really big.”

A House bill analysis estimated the holiday period will reduce state revenue by $26.6 million and local government revenue by $6.8 million.

The holiday allows shoppers to avoid paying sales taxes on clothes and shoes costing up to $60 per item; school supplies that cost $15 or less; and personal computers and related accessories priced at $750 or less.

The state has offered back-to-school tax holidays most years since 1998. Computers return to this year’s list after being left out of a 2016 tax holiday.

Two years ago, meanwhile, the holiday ran 10 days, with the clothing limit at $100 and a discount on the first $750 of the sales prices of computers.

Florida retailers have long backed the tax holidays. But not everyone thinks such discount periods provide wide-ranging benefits.

The Washington, D.C.-based Tax Foundation released a study July 25 deriding the periods as simply shifting spending rather than stimulating economic growth.

“Shoppers waited until the holiday to purchase exempted goods, thereby slowing sales in the weeks prior to and following the holiday,” the study said.

The Tax Foundation questioned the expense of having to recalibrate store computers for the discount periods and called the holidays “a gimmick that distract policymakers and taxpayers from real, permanent, and economically beneficial tax reform.”

The foundation also labeled the discount periods as a form of “picking winners and losers” – a favorite target of many Florida politicians opposed to business incentives — by favoring products and industries through arbitrary tax exemptions. The foundation also maintained that large businesses lobby for the holidays as a way to receive free advertising.

Miller disagreed.

“I know there are reports out there saying these sales-tax holidays aren’t that good for retailers,” Miller said. “One thing I would say is if that was the case, retailers wouldn’t be making this one of their significant legislative priorities year in and year out.”

He added that many retailers that don’t offer items on the state’s discount list take advantage of the period by offering their own sales.

“There are tens and tens of thousands of retailers in this state that benefit from this,” Miller said. “There are others retailers that can piggyback on it and have promotions in conjunction with it. That’s what I would do if I were a retailer. When you consider technology, clothing and supplies, that is a large number of retailers that will be eligible. We are excited about the weekend, and we know they are too.”

Florida, one of 16 states this year offering back-to-school breaks, also offered a tax holiday on disaster-preparation items in June to mark the start of hurricane season.

Two other key portions of the overall tax-cut package – an elimination of sales taxes on feminine hygiene products and a reduction in a commercial lease tax – go into effect on Jan. 1.

Republished with permission of the News Service of Florida.

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The News Service of Florida provides journalists, lobbyists, government officials and other civic leaders with comprehensive, objective information about the activities of state government year-round.

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