TALLAHASSEE – Florida retailers are calling on lawmakers to bring back the back-to-school sales tax holiday in 2011, and they have new data to make their case. A new study by The Washington Economics Group (WEG) that examined the impact of the 2010 back-to-school sales tax holiday confirms that increased spending during the three-day period translated to augmented tax revenues for Florida. According to the report, the sales tax holiday generated $115 million more in taxable sales [when compared to the same weekend from the previous year without a sales tax holiday] and gross sales projections for the month of August were surpassed by $289 million. The bottom line: a $7 million net increase in tax revenues to the state over and above what would have been collected without any tax break incentive.
After a two-year hiatus, the popular back-to-school sales tax holiday was welcomed back last year by state retailers eager to boost sales and customers ready to save. Legislators approved the three-day weekend to give parents a much-needed break at the cash register on essentials such as paper, pencils and inexpensive clothing – but retailers know from years of experience that when shoppers open their wallets to save big during the temporary tax relief, they spend more overall.
“With results this significant over a single weekend, imagine how much of an impact could be made on the state’s retail sector – and the state’s coffers – if this sales tax holiday became an annual occurrence,” said Rick McAllister, president and chief executive officer of the Florida Retail Federation, a nonprofit trade association with more than 8,000 members.
“There is a phenomenon about a sales tax holiday that pulls people into the stores and encourages them to purchase not only tax-free items, but also other taxable items that generate revenue for the state’s economy,” said McAllister. “Shoppers tell us that buying items tax-free is like having a bonus in their wallets.”
Consumers’ additional spending on taxable items and increased shopping activity boost the state’s critical retail sector and drive higher tax revenues during the sales tax holiday.
WEG also surveyed five major Florida retailers during last year’s sales tax holiday weekend from August 13 to 15 and found that store traffic, transaction counts, and payroll hours all increased as well.
“In a time of severe budget cuts and difficult economic times for Florida families, a sales tax holiday makes sense all around,” said Senator Ellyn Bogdanoff, a sponsor of the bill. “The WEG study proves what we already knew: not only do tax holidays save families money, they also ultimately increase revenues for the state – money that can be used to fund important projects in a tight fiscal year.”
“The increased traffic provides an additional boost to the state economy by adding retail jobs to handle the higher sales levels and higher tax revenues,” said Bogdanoff. “Everyone wins.”
Representative Elizabeth Porter is the House sponsor of the bill.
Retailers are proposing that a three-day weekend in August of this year be reserved for a sales tax holiday in Florida on specific items.
To read the full report and get more information about the 2011 back-to-school sales tax holiday, visit: http://bit.ly/fXqx1P.
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