LETTERS.

• Position: Brief Article

SALES TAX HOLIDAYS, NO HOLIDAY AT ALL

Dear Editor:

I read with great interest Mandy Rafool's article on sales tax holidays in the October/November issue of State Legislatures. Rafool and your magazine are to be congratulated on shedding light on some of the problems associated with sales tax holidays.

Sales tax holidays have proliferated in recent years, and the article points out correctly that this trend will continue. Holidays are politically attractive because they give an impression of tax relief.

But it cannot be overemphasized that sales tax holidays violate the principles of sound tax policy. They distort the market. And they complicate compliance and administration.

More importantly, sales tax holidays don't work. The holidays are usually declared during the back-to-school shopping season. Studies have shown that stores are less likely to provide discounts or offer sales during the holiday. Indeed, some stores are likely to raise prices knowing that more people will be shopping during that time.

Every time a sales tax holiday is proposed, lawmakers hail the effort as helping the middle class, working parents and the rest of middle America.

Legislators are rightfully concerned about the unfairness of the sales tax...