Alabama’s eighth annual sales tax holiday begins Aug. 2 at 12:01 a.m. and ends at midnight Aug. 4, offering savings on supplies, clothing and electronics students need to begin the school year prepared. During the weekend, state and county taxes will be waived, as well as local taxes in Talladega, Sylacauga, Pell City, Lincoln, Munford, Oak Grove and Childersburg.
“Obviously, with the economy being tight like it is, people want to save money any way they can, and this is a huge opportunity to save,” said Jason Daves, executive director of the Greater Talladega Area Chamber of Commerce. “Parents never want to short a child on their education and that includes things they need for school. It’s a necessity, and it’s nice to have a tax break on these necessity items.”
According to the Alabama Department of Revenue, there will be no tax collected on: general clothing items costing $100 or less; computers, computer software and school computer supplies made in a single purchase of $750 or less; school supplies, art supplies and instructional materials costing $50 or less per item; and books costing $30 or less each.
Items within these categories that will remain taxable are: clothing accessories such as belts, jewelry, hair notions; protective equipment; sports or recreational equipment; furniture; recreational gaming systems; non-educational video games; magazines and periodicals.
An itemized list of tax-exempt items can be found at www.revenue.alabama.gov.
Local businesses are already preparing for the holiday weekend with specials, back-to-school advertisements and increased inventory of school-related items. Sylacauga Walmart store manager Keith Mock said their store is expecting a 4 to 5 percent sales increase during the holiday.
“We build up on, of course, basic back-to-school merchandise for the weekend,” he said. “We bring in extra staffing, and we get school supply lists from all the area schools and provide copies of that for our customers. We also bring in extra things that we don’t carry year round, like school uniforms and mesh backpacks.”
Mock said Walmart expects particularly high sales of computers, laptops and related technology. The Sylacauga location is planning a sale on some clearance laptops to further savings.
“(The tax-free holiday) doesn’t just benefit back-to-school customers; it benefits all customers,” Mock said. “All of our customers can get a really good deal, especially on electronics that weekend. There will be opportunities to get items for the clearance price, and save on the 8-percent tax as well.”
The holiday also encourages area residents to shop locally, rather than online, Daves said.
“It gives them an incentive to get out and visit our local merchants because they are receiving a significant discount depending on what they’re buying,” he said. “There’s quite a few things exempt, and I commend our city leaders who agreed to adopt the state’s policy, because you are not required to do that.”
While many view the tax break as a positive, there are some who believe otherwise. A study by the nonpartisan Tax Foundation, based in Washington, D.C., shows such holidays are a “poor substitute for real reform,” the group said in a press release.
“Research has shown that the vast majority of consumer purchases during sales tax holidays are merely timed to coincide with the holiday period, rather than being stimulated by it,” the press release stated. “Thus, such programs have little or no effect on overall economic activity. In addition, sales tax holidays also create complexities for compliance and inventory management. Reconfiguring software and other procedures for only two or three days causes headaches for business owners while only providing consumers a temporary 4 to 7 percent discount.”
This year, 17 states will sanction periods of time when selected goods are exempt from state, and sometimes local, sales taxes, down from a high of 19 states in 2010.
“Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief.” said Joseph Henchman, Tax Foundation Vice President for Legal & State Projects. “If a state has to offer a ‘holiday’ from its tax system, it’s a sign that there’s a problem with the system itself. If politicians want to save money for consumers, then they should cut the sales tax rate year-round.”
Late summer and early autumn see the greatest concentration of sales tax holidays, with 12 states anticipating the back-to-school holiday Aug.2-4.
According to a survey by the National Retail Federation, families with school-age children will spend an average $634 on apparel, shoes, school supplies and electronics this year. Spending is expected to be down from last year, a historically high season, when it averaged $688. Nationwide spending on back-to-school will likely reach $26.7 billion.
With or without a tax break, NRF reports that Americans are looking to cut corners where they can, though spending is still well above where it was a few years ago.
“The good news is that consumers are spending, but they are doing so with cost and practicality in mind,” said NRF President and CEO Matthew Shay in a press release. “Having splurged on their growing children’s needs last year, parents will ask their kids to reuse what they can for the upcoming school season.”
The biggest portion of back-to-school budgets goes to apparel and accessories – 95 percent of those with school-age children will spend an average of $230.85 on fall sweaters, denim and other attire. Families will also spend approximately $114 on shoes and $90 on school supplies.
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