Tax-free weekend has finally arrived. Shoppers in Alabama, Arkansas, Connecticut, Florida, Iowa, Louisiana, Maryland, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia all get to shop without paying state sales taxes this weekend. This puts retailers on an even keel with Amazon and other online retailers that can skip paying state sales taxes every day. Tax free weekend is good and it is bad, depending on your viewpoint.
For those in favor, tax-free weekend is supposed to keep citizens’ money in-state. People can buy stuff locally and know they will not get an added line item of “state sales tax” on the receipt. People feel they can buy products at Amazon without paying any state sales tax, why not get a chance to buy products locally without paying a state sales tax?
The tax-free weekend also helps support various “buy local” movements. Consumers are good hearted and would rather buy from a local retailer than send the money to another state. When they see local prices and know they will have to add 7% or 8% state sales tax on top of what they can find locally, they write shopping lists for Amazon. With all other factors being equal, they find a 7% or 8% discount when going to Amazon. The tax-free weekend negates that savings and helps keep the money local.
This money helps small retailers keep the doors open, buy goods themselves and remain in business. Main Street wins.
For those opposed, tax-free weekend ends up as an expense for the state. When the state enacts tax-free weekend, it appears on the books as a reduction in revenue. State governments are going through tough times too. Decreasing their revenues is not part of the solution. The California General Assembly in Sacramento has not approved a tax-free weekend.
Critics also argue that last year’s tax-free weekend had minimal benefit. South Carolina debated whether or not they should renew tax-free weekend in 2012. People went shopping but they didn’t buy as much as proponents had hoped. Why then, did the state offer a gift in the form of tax-free weekend?
This debate between the proponents and opponents of tax-free weekend may continue until the end of time. Too many other factors come into play and affect consumers’ willingness to spend their hard earned money. This year is an election year. 2011 wasn’t. Economic news isn’t as painful these days as it was last year. Some sectors, like real estate, have bottomed out and are showing resurgence. 2012’s tax-free weekend could end up the roaring success that states had anticipated last year. Only time will tell.