A holiday from taxes

Sunday, May 9, 2004

When the Missouri Legislature enacted a law creating a sales-tax holiday for back-to-school shopping, it intended to help families of school-age children, often on limited budgets, and to promote shopping at Missouri retailers.

That's exactly what many cities and counties expect to happen Aug. 13-15 when the state's first sales-tax holiday occurs.

And while some cities and counties have opted not to participate in the sales-tax holiday, many in our area have chosen to let shoppers have a bit of a break from sales taxes.

The cities and counties that have chosen to opt out say they can't afford to lose any revenue.

But there is every indication from similar sales-tax holidays in other states that limited exemptions from sales taxes actually spark increased sales of taxable items, thus producing more revenue for taxing entities.

Still to make a decision about the sales-tax holiday is the Cape Girardeau City Council. The city is asking voters in June to approve a quarter-cent sales tax increase that would generate $2 million a year for much-needed upgrades in the fire and police departments. Some city officials have expressed concern that granting a sales-tax holiday would be confusing to the city's efforts to close its budget gap.

Given the fact that retailers and other backers of the sales-tax holiday predict increased sales and more tax revenue, it would appear to be a prudent choice for Cape Girardeau to go along with the sales tax holiday. The city council is expected to take final action at its May 17 meeting.

In brief, here's how the sales-tax holiday works. On the Friday, Saturday and Sunday of Aug. 13-15, retailers will not charge sales tax on specific exempt items, mostly school supplies and back-to-school apparel. There are limits for some of the tax-exempt items.

In most cases, the tax relief will amount to about a 6 to7 percent savings for those areas not opting out. That amount can mean a lot to growing families.

In addition, retailers expect sales of others items that aren't exempt in the tax holiday to increase as well. Shopping families will be thirsty and hungry, for example, and they will need to buy gasoline for shopping excursions. And maybe Mom or Dad will find an appliance or lawn mower that strikes their fancy.

If the sales-tax holiday turns out as well as its promoters expect, it should become a fall fixture for years to come.

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