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Do the Sales Tax Holidays Work?

July 25th, 2014 by flanews

Another sales tax holiday hits Florida next week, and don’t tell the kids because it’s for back to school supplies. Matt Galka tries to find out if the sales tax breaks really work.

The legislature and Governor promised to save Floridians 500 million dollars this year. Part of it is through sales tax holidays

“House bill 5601, which does a lot of things, including putting 121 million dollars back in Florida family’s pockets,” said Gov. Rick Scott (R-Florida) in May.

The first sales tax holiday was for hurricane supplies in the first week of June.  Florida’s revenue estimating conference says shoppers saved about $2.7 million in sales tax this year. But supply store manager Tyler Gouldbourn didn’t notice.

“Despite the tax break I did not see a large increase in business related to generator sales or really even inquiries related to generator sales,” said Gouldbourn, the manager of All Pro Equipment in Tallahassee.

The Florida Retail Federation says that the next sales tax holiday is where they expect the most bang for the buck.

A back to school break starts August 1st.  Customers will be free of Florida’s six percent sales tax on clothing, footwear, and accessories that cost less than $100 dollars.

“The legislature estimates that the tax holiday alone will save Floridians about 40 million dollars statewide this year. It could easily be much higher when you add on the sales and markdowns,” said John Fleming with the Federation.

The FRF says an economics study from four years ago provides the answer as to whether the holidays work. It compared the tax free shopping from 2010 to 2009 – when there was no sales tax holiday.

“What we saw was that the sales did go up for the entire month in the year that we had the tax holiday, much more than they would have been we think without the tax holiday,” said Fleming.

The study also showed that the state made about 115 million dollars more that year in tax revenue during the three day tax free period. Meaning shoppers were more inclined to buy items that weren’t tax free.

The school supply sales tax holiday runs from August 1st through the 3rd.  In September, Floridians will have the chance to buy energy efficient appliances tax free for a three day period.

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