Sales-tax holiday

When the idea of the sales-tax holiday was introduced a few years ago, it was surrounded by much debate. Many wondered whether the idea would be detrimental to city and county coffers.

Last week in Cape Girardeau, stores were filled with back-to-school shoppers hoping to take advantage of the 7.5 percent tax relief on items such as clothes, supplies, computers and software. In addition, stores offered countless additional discounts, hoping to add more shopping incentive. Local retailers say the first weekend in August has become one of the busiest shopping weekends of the year. And restaurants were also busy. It's a safe bet that furniture stores, car dealerships and other establishments that offered no tax relief also saw increased foot traffic.

It's no wonder the chamber of commerce endorses the idea.

Locally, about the only entity that questions the benefits of the holiday is the city of Cape Girardeau. Municipalities have the choice to not participate. But Cape Girardeau, somewhat reluctantly, chooses to be a part of the tax holiday. The city has tried a couple of different ways of computing the impact. City finance director John Richbourg compared the growth of quarterly sales-tax revenue since October 2003. According to a memo he provided to the city council, two of the three slowest-growing quarters were in the quarters that contained the sales-tax holiday. He also compared August sales-tax revenue to July sales-tax revenue before and after the implementation of the holiday. In August 2002 and 2003, sales-tax revenue was 4.86 percent and 6.44 percent greater than the previous July. But after the implementation of the sales-tax holiday, the 2004 and 2005 revenue increased by just 0.89 percent and 3.15 percent. The city, Richbourg estimates, takes a hit anywhere from $30,500 to $58,000.

Other taxing entities, meanwhile, report that overall revenue is up, thanks to the shopping spree generated by the tax holiday.

The success of the tax holiday isn't just about tax revenue. It's primarily about helping businesses and consumers. To that end, the holiday has succeeded.