Hurricane Season Sales Tax Holidays: Save Now, Pay Later

Hurricane season is upon us and to help flip-flop-wearing Floridians prepare, Gov. Rick Scott recently approved a nine-day sales tax holiday, which ends Sunday.

Batteries, flashlights, generators, weather radios, and water are all on the list of things you can buy without paying the state's 6 percent sales tax.

The tax holiday, which is really a government stimulus in disguise, is just one of three that Scott has bestowed upon the state. Louisiana and Virginia have already held their hurricane season tax holidays. But in states not lucky enough to be the subject of Mother Nature's watery wrath, back-to-school events tend to win similar temporary tax reprieves. In 2013, 17 states put on tax holidays for education.

Gov. Scott and other politicians enjoy touting the benefits of these sales tax vacations because they are popular with voters. They say it helps the poor, and the retail rush boosts the economy. But are those claims true?

The short answer from the Institute on Taxation and Economic Policy is "no."

In a 2013 report, the institute addresses claims that the holidays inflate retail sales: 

Increased sales during sales tax holidays have been shown to be primarily the result of consumers' shifting the timing of their planned purchases.

And who are the consumers who are best able to shift the timing of their planned purchases?

Wealthier taxpayers are often best positioned to benefit from the holidays, since they have more flexibility to shift the timing of their purchases to take advantage of the tax break—an option that isn't available to families living paycheck to paycheck.

The report found other problems with the the economics of government-sponsored shopping seasons as well, including retailers exploiting them by temporarily increasing prices or watering down sales promotions, and the increase of administrative costs for state and local governments that normally collect the tax. 

In the long run, the study concludes,

Revenue lost through sales tax holidays will ultimately have to be made up somewhere else, either through painful spending cuts or increasing other taxes.

Steve Chapman came to the same conclusion in a 2010 article for Reason in which he asked:

If sparing shoppers the sales tax is such a blessing, why don't our leaders get rid of it the whole year round? If it's a dose of adrenaline to a weak economy, why not repeat the treatment next month, and the month after? If we can increase state collections by suspending the sales tax, couldn't we increase them even more by abolishing it?

Might as well get your reduced-price chainsaws now! You'll pay the difference later anyway.

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  • Almanian!||

    Wow. I'm shocked. Utterly. That these actions might not benefit many people. But that those most likely to benefit tend to be wealthier.

    Wow. Pretty shocking.

  • ||

    You know who it benefits, dude? The politicians who get to tout having "done something" for the people. Is it harming anyone? What the fuck do they care?

  • Almanian!||

    You know what - they should pay people to turn in old cars. They can buy NEW cars. But the old car must be destroyed. Well, at least its engine is destroyed. So it can't be resold as-is and put back on the highway to pollute and drop parts in from of other cars and stuff.

    It would be a super-bonus-multiplier effect, cause new car sales + increase in the price of used cars + increase in used car parts prices + PROFIT!

    We should try this. Srsly. If the states won't do it, I hope the national gummint has the vision and leadership to do this.

  • Brendan||

    They tried that with Cash for Clunkers, which would have been a rollicking success if only the government had been able to invest more money in it.

    I'm in favor of "Hundreds for Houses".
    If you turn in your old (over 10 years old) house, the government will give you cash which you can use to buy a new one. The old house has to be demolished by the realtor within 30 days of the credit being paid out.

    It'll do wonders for the economy.

  • Almanian!||

    in from of

    Really? "in front of"

  • Brian D||

    Every day's a sales tax holiday in NH.

    /smug

  • ||

    How's your property tax?

  • Brian D||

    $1800 per year for my two bedroom condo in the city. Far worse if you dare to "own" land.

  • Brendan||

    If the internets are to be believed, they are in between New Jersey and Vermont and 2nd highest in the nation.

    I've toyed with the idea of moving to Maine, but buying everything I can in NH.

  • ||

    Maine has its own problems. NH is probably your best bet. Yeah, you get killed on the property taxes but no sales tax, no income tax, and you can vacation in Maine very easily.

  • Agammamon||

    Why. . . why would you do this? Do you hate yourself or is it just your family?

  • ||

    Explain, kemosabe.

  • Sevo||

    ..."either through painful spending cuts"...

    NOOOOOOOOOOOOOO!

  • Fist of Etiquette||

    Hurricanes are on sale, eh?

  • Invisible Finger||

    Not being taxed is ALWAYS good.

  • Brett L||

    Yeah. I think I come down on the side of, "the only problem is that the holiday is neither universal in application nor permanent in duration."

  • Free Society||

    Exactly. There has never been anyone who was better off being taxed than they were not being taxed. The idealistic notion that potholes aren't being filled is a result of using coercion to facilitate economic interaction.

  • Invisible Finger||

    But are those claims true?

    When it comes to NOT being taxed, I couldn't care less about the reasons.

  • Invisible Finger||

    Revenue lost through sales tax holidays will ultimately have to be made up somewhere else, either through painful spending cuts or increasing other taxes.

    Pure bullshit. The revenue is not an entitlement, nor is the spending.

    God this assholery just pisses me off.

  • ||

    ^This.

  • Brandon||

    Revenue lost through sales tax holidays will ultimately have to be made up somewhere else, either through painful spending cuts or increasing other taxes.

    How about non-painful spending cuts? Is the Institute too deep in DC bullshit to realize that those exist?

  • califernian||

    yes

  • SIV||

    "Nothing left to cut"

  • Free Society||

    It's no surprise that the author notes Steve Chapman's concurrence with that gem of progtarded logic.

  • R C Dean||

    This is just moving demand around. Mummery and misdirection.

  • Free Society||

    The only possible unjust tax cut would be one that isn't applied universally and in totality.

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