COLUMBUS – Large crowds are expected at stores across Ohio this weekend as retailers mark the first-ever “sales tax holiday” in the state.
From midnight Friday until midnight Sunday shoppers will not pay state sales tax on items of clothing or footwear, up to $75 per item, or on school supplies or instructional materials, up to $20 per item, with no limit on purchases.
See the complete list of eligible items here
Electronic items, like computers and tablets, are not eligible for the tax exemption but retailers still expect the weekend to bring crowds of back-to-school shoppers.
“I’m sure it’s going to drive a plethora of customers out into the marketplace for all different types of retailers. It’s really going to help boost that economy,” Michael Smith, with the Best Buy in Mayfield, said.
However, the research group Policy Matters Ohio cites a Legislative Service Commission estimate that the holiday would cost the state as much as $17.2 million in lost tax revenue while failing to benefit working families or the overall state economy since the tax relief is temporary and does not increase sales overall, merely alters their timing.
The tax break was the idea of state Sen. Kevin Bacon (R-Minerva Park) who says — according to the National Retail Federation — the average family with school-age children spent an estimated $470 on back-to-school supplies and clothing in 2014, not counting electronics, and will save at least $27 if they shop while the 5.75 percent state sales tax is being waived.
Over a dozen other states have similar sales tax holidays in place, and there is debate over the benefits, but Bacon predicts Ohio businesses will see an influx of residents from neighboring states, none of whom have a tax holiday of their own, and the increased traffic at retail stores will benefit nearby businesses.
“It’s kind of like Black Friday and people shop and while they’re out they’re going to go out to eat and they’re going to do other things,” he said.
The University of Cincinnati Economics Center predicts store owners will see a sales boost of almost five percent with average families saving about $38.
Tax policy expert Cara Griffith with Tax Analysts says there is some advantage for consumers, but after the spike in sales, retailers may see less spending.
“From an actual revenue standpoint, businesses might see more revenue; states are certainly going to take a revenue loss in terms of the taxes they would have received. But I think at the end of the day the real benefit of these are they are incredibly politically popular because it sounds like you are doing a really good thing for consumers,” she said.
The Institute on Taxation and Economic Policy says sales tax holidays cost states about $300 million.