Wednesday, July 30, 2008

Another Sales Tax Holiday?

It seems like only yesterday that I was writing about Virginia's first sales-tax holiday for back-to-school items. Yet it turns out that was two years ago, in August 2006.

The third such tax-free weekend starts this Friday. Holly Prestidge reported in the Richmond Times-Dispatch on Sunday:

Parents across the state will get some relief Friday, Saturday and next Sunday as the state waives the 5 percent sales tax on school supplies valued at $20 or less, and clothing and shoes $100 or less.

According to a recent survey by the National Retail Federation, consumers are expected to spend an average of $594.24 on back-to-school shopping this year, up from $563.49 last year, for electronics, clothing, shoes and school supplies.

The retail group and others believe sales-tax holiday weekends, such as the one in Virginia, will be more meaningful this year for consumers because of the slowing economy and higher gasoline prices.

"They're having to look for ways to save [because] it's almost weekly we're seeing changes" at the gas pump or in the grocery stores, said George Peyton, vice president of government relations for the Retail Merchants Association in Richmond.

Writing in today's Roanoke Times, David Harrison notes that the list of tax-free items is not as transparent as one would hope. In fact, it's downright confusing:

The Virginia Department of Taxation has adopted a relatively broad definition of school supplies. A partial list, available on the department's Web site, includes items such as binders, book bags, chalk, lunchboxes, rulers, scissors, sheet music and paper.

If you have no connection to schools but need these items anyway, you're in luck. The tax holiday still applies to you.

The picture gets a little more confusing when you start looking at clothing. Shirts, pants, dresses and sports jerseys are tax-free.

But how about purchases of suits and wedding veils? Also tax-free.

And cleats, mouth guards or shin pads for students' extracurricular athletics? Those are taxed.

It seems there has been little adjustment in the list of tax-free and fully-taxed items since that first trial run of the tax holiday back in 2006. (The list of tax-exempt school supplies can be found here; the list of tax-exempt clothing items can be found here.) As I wrote at the time:
The easiest, most logical, most consumer- and business-friendly thing to do for the tax holiday would simply have been to decree that on this particular three-day weekend, all items with a retail price of $100 or less would be tax-exempt. That would be simple to program into stores' computers, and it would be simple for the average customer -- that is, taxpayer -- to understand.

Well, nobody ever accused legislators of being consumer-friendly -- or logical.
If you don't have to buy a lot of school supplies but are looking for a chance to make a purchase without paying a tax on it -- short of driving to the outlet malls in Delaware -- you can look forward to another tax holiday later this year. Drew Houff reports in today's Winchester Star:
In October, shoppers will be able to purchase certain energy-efficient appliances priced at $2,500 or less without paying sales taxes. The items are limited to noncommercial home or personal use.
Houff also gathered these tidbits from the world's largest retailer:

E.R. Anderson, the Washington-based regional media director for Wal-Mart, said the sales tax holiday has become quite busy for the stores throughout Virginia.

She said Wal-Mart stores expect shoppers to save $800,000 on eligible items during the three-day event.

“We will be stocked up and staffed up for those days,” Anderson said. “We will have signage show what is a sales tax holiday item. We will list all of the products the commonwealth of Virginia has determined to be back-to-school.”

She said Wal-Mart also will allow consumers to purchase electronics tax-free, with the company paying the sales-tax costs. Those items include computers, computer accessories, television sets, and wireless communication devices.

“There is no dollar limit, and we will absorb all sales tax for them [on electronics],” Anderson said.

And, if this weekend's tax holiday and the appliance holiday in October are not enough, Sharon McLoone reminds us in her small business blog for the Washington Post:
The commonwealth also holds a recurring sales-tax holiday each May for hurricane and emergency preparedness equipment, and that includes a range of items like bottled water and battery-operated can openers.
How about this idea? A tax-free year. Is that too much to hope for?

Check out the gift items I have designed at my CafePress shop, called (naturally) "Gifts from"

1 comment:

Chryste said...

Nice post..! I am waiting for Virginia's first sales-tax holiday. I have to do back to school shopping.