Sales Tax Holidays: Big Savings or Big Cost?

Sales Tax Expert Diane Yetter created an infographic called “Sales Tax Holidays: Big Savings or Big Cost” to illustrate their cost (not their savings) to taxpayers.

Chicago (I-Newswire) August 5, 2012 - The Back-To-School Sales Tax Holiday Season officially kicked off July 27 in Mississippi, the first of 19 states to give consumers a “break” on sales taxes for a designated period on targeted products such as back-to-school supplies, clothing and computers. Some states also offer Sales Tax Holidays for hurricane preparedness supplies and products that bear the Energy Star label.

And while consumers always appreciate a good discount, they should question what this discount actually costs them, said sales tax expert Diane Yetter. “With the average sales tax rate between 8% and 9%, the sales tax ‘discount’ is usually much lower than a typical sale discount offered by retailers. And managing the sales tax holiday costs retailers – not only do they have to reprogram their computer systems and separately account for all the differences among the states, but since the crowds are bunched up on the holiday dates, they have to bring in extra staff.”

Also, what most people don’t realize is that states lose money when they offer Sales Tax Holidays. “When states offer the holidays and don’t receive the sales tax revenue expected for the time period, they will have to recoup that money from the same source – taxpayers – but in a different way,” said Yetter, owner of YETTER and founder of The Sales Tax Institute.

Yetter created an infographic called “Sales Tax Holidays: Big Savings or Big Cost?” to illustrate their cost to taxpayers. View it at http://www.yettertax.com/published/sales-tax-holidays-big-savings-or-big-cost/

Yetter’s stance supports that of the Tax Foundation, which categorizes sales tax holidays as “politically expedient but poor tax policy.” The infographic points out that the best way to save state governments and consumers money is to lower sales taxes year-round, which results in the same impact to the state’s revenue.

About Diane Yetter: Yetter is President and Founder of Chicago-based YETTER (http://www.yettertax.com), a sales tax consulting firm. She is also the founder of The Sales Tax Institute (http://www.salestaxinstitute.com).