In recent years, the economic impact of sales tax holidays has been widely debated, according to a new special report in this week’s issue of the Bloomberg BNA Weekly State Tax Report.
While sales tax holidays continue to remain popular in the eyes of certain politicians and spendthrift consumers, their economic effectiveness has been debated in recent years, according to the BBNA special report. A 2013 Tax Foundation Special Report found that while sales percentages go up during tax holiday periods, annual state sales remain unchanged. This suggests that consumers do not buy more items during a single year, but rather shift the timing of their purchases to take advantage of tax-free shopping. The actual result is a decrease in state and local tax revenue, the BBNA special report states.
For an in-depth look at sales tax holidays and whether they are an effective tool, check out the complete BBNA special report, which can be read in its entirety here .
Continue the discussion on Bloomberg BNA’s State Tax group on LinkedIn : Do you think that sales tax holidays promote economic growth?
For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.
In other developments…
What Does Kansas’ Botched Tax-Cut Experiment Portend for Other States? , by the Center on Center on Budget and Policy Priorities
District of Columbia Shows How to Cut Taxes Responsibly , also by the Center on Center on Budget and Policy Priorities
The Tax Foundation Reviews a New NBER Paper that Analyzes Sales Tax on Services
Compiled by Priya D. Nair
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