Missouri tax holiday begins Friday

Wednesday, August 3, 2005

Merchants expecting huge weekend in sales as shoppers can save up to 7 percent in taxes.

The sales tax holiday for back-to-school purchases is back, and retailers are bracing for a stampede of shoppers this weekend second only to the Christmas.

"We are expecting 20 percent more than a regular weekend," said Debbie Marshall, human resources manager of the Cape Girardeau Target store. "Last year, some people may not have known about it, and we are gearing up for an even better weekend than last year."

Missouri lawmakers brought the sales tax holiday back this year and made it permanent. Because the bill wasn't signed until early last month, cities and counties that allowed the tax exemption on back-to-school items last year must offer it again this year.

The state's 4.225 percent sales tax won't be collected anywhere on exempt items. But there are numerous local-option sales taxes adopted by cities and counties that can add 3 percent or more. Inside the Cape Girardeau city limits, the holiday savings adds up to almost 7 percent.

Some people buying school supplies Tuesday at Target knew about the holiday but had other plans for the weekend and weren't making major purchases anyway. But Lori Friese, whose children will be in elementary school in the Jackson School District, said she hadn't heard that the tax holiday was being held again.

With a school-mandated list of supplies in hand, Friese said she planned to go ahead and make her purchases. "We really don't need clothes, but we might go out this weekend," she said.

The tax holiday runs Friday through Sunday. And though some local officials are grumbling about the potential loss of sales tax revenue, there isn't much they can do.

"We participated last year, and it was supposed to generate additional sales" on items not included in the exemption, Cape Girardeau County Presiding Commissioner Gerald Jones said. "We can't find any evidence that it did."

The county estimates it lost $35,000 to $40,000 last year, Jones said. The county imposes a 1/2-cent sales tax to fund general operations.

Business representatives question figures such as those cited by Jones or the city of Cape Girardeau, which estimates its loss at $50,000. The issue isn't as easy to judge as whether a city or county could receive some extra money if the tax was collected, John Mehner, president of the Cape Girardeau Chamber of Commerce, said.

Neither Kentucky nor Illinois offers the exemption, Mehner said, and that means the tax holiday will attract customers from those locations. And with regional cities like Caruthersville, Dexter, Charleston, Kennett, New Madrid, Poplar Bluff and St. Genevieve not participating, taking part in the holiday reinforces Cape Girardeau's place as a regional shopping hub.

"We are much better off being a city that participates so those customers come here to our merchants," he said. "Communities that do not participate do not stand to get additional traffic."

Officials from Jackson, Cape Girardeau and the county will be looking closely at the impact of this year's holiday. The law will allow cities that take part in the exemption this year to impose their local taxes during the holiday next year. And cities that are not participating will also have the opportunity to change their minds as well.

The best bill would have been a law that requires all jurisdictions to take part, said state Sen. Jason Crowell, R-Cape Girardeau. Crowell was the Senate sponsor of the sales tax holiday. But if lawmakers supporting the holiday had insisted on statewide participation, he said, there would be no holiday.

"That's the reality of the political process," Crowell said.

Cape Girardeau finance director John Richbourg said the city's $50,000 loss is spread among several city funds -- general operations, the fire department, road work and capital improvements. Together, those sales taxes brought in about $18 million last year, Richbourg said.

The city council will decide whether to participate in the future, Richbourg said. Asked his opinion, he said: "You're asking a finance director who always wants every last penny to be available. We don't have any fluff in our budget. There are always things we need that $50,000 would help out on."

Westfield West Park is using radio spots to advertise the holiday, said Paul Dobbins, mall manager. Dropping out of the holiday in future years would be a mistake, he said.

"It has proven to be a benefit for shoppers, retailers and government," he said. "The traffic last year was quite impressive."

The city of Jackson, which has a much smaller retail base than Cape Girardeau, doesn't seem to have lost revenue because of the holiday, city manager Jim Roach said. "At worst, it appears to be kind of a pass. If that is the case, I would recommend we stay with it."

Jackson imposes a 1 percent sales tax for general operations and a one-half percent tax for transportation.

Roach and Jones both predicted that any decision about participating next year will include talks among county, Cape Girardeau and Jackson officials about what is best. "We want to be competitive, but at the same time we also want to be cooperative," Roach said.

Officials should do what is best for their residents, not what is best for their treasuries, in making a decision about next year, Crowell said. The biggest benefit of the tax holiday goes to people on a modest income struggling to buy supplies and clothes for their children, he said.

"It is not my mission to make sure cities make money off their citizens," Crowell said. "I understand their point, but I would respectfully say it is not their money."


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