COLUMBUS – If you enjoyed the three-day break from the state’s sales tax last August, you will be happy to know it will return. For a limited run.
Under a bill being sent to Gov. John Kasich’s desk, the tax-exempt period Aug. 5-7 would apply to clothing items that cost $75 or less and to classroom supplies and instructional materials that cost $20 or less. Such items include book bags, textbooks, notebooks and pencils.
The House passed the bill on a 94-1 vote Wednesday.
The proposal follows a similar tax holiday held last year to help back-to-school shoppers reduce the cost of clothing and school supplies.
The bill’s original sponsor, Sen. Kevin Bacon (R-Minerva Park) intended to make the sales tax holiday permanent but lawmakers scaled it back to one year only.
It “will help families stretch their dollar a little further as they purchase the materials to prepare their children for success in the classroom,” said Bacon. “The opportunity to save money on essential clothing and school items will reduce the financial strain on families and will boost sales for local retailers.”
Popular with parents and a retailers, it caused some concern among those who watch the state’s tax revenues. A legislative analysis found the bill could reduce state revenue by up to $15 million in the next budget year.
In a study on behalf of the Ohio Council of Retail Merchants, which supports the holiday, the University of Cincinnati Economics Center estimates that the state saw a net gain of $4.7 million in tax revenue over the three-day period last year, the Columbus Dispatch reported.
The study attributed the increased sales tax collections to two factors: that people shopping during the holiday also purchased more goods and services that were not tax exempt, and that counties adjacent to the state line drew people from neighboring states.
Ohioans saved approximately $3.3 million on back-to-school items during the 2015 sales tax holiday and statewide retail sales increased by 6.48 percent during August, Bacon said.
“Last year’s Ohio sales tax holiday was a win-win for parents, students and businesses alike,” he said.