On Holiday from the Sales Tax.

• Author: Rafool, Mandy

Customers love them. Merchants applaud. Sales-tax holidays provide temporary, modest tax relief, but opponents say they're just another layer in an overly complex sales tax system.

Attention shoppers: There will be no sales tax on select items for one week in August. Plan your purchases accordingly.

Announcements like this are becoming more widespread as states across the country grant shoppers a temporary reprieve from the sales tax. The concept of sales tax holidays, in which certain items are exempt from the sales tax for a period of time, has really caught on with lawmakers over the past few years as a way to provide tax relief that is modest and temporary. Sales tax holidays have grown from one state in 1996 to seven in 2000, and several more are pondering the idea.

New York was the first state to approve a sales tax holiday in 1996. Bowing to pressure from retailers who argued that they were losing business to Connecticut, Massachusetts, New Jersey and Pennsylvania where clothing isn't taxed, the Legislature instituted the first tax-free week in January 1997. All clothing and footwear priced under $500 was exempt from the state sales tax. Local governments were given the choice of opting in or not. Most counties and cities did suspend local taxes during the holidays. In New York City savings equaled 8.25 percent.

The holiday was considered a success, and New York shoppers went on to benefit from two tax-free shopping weeks per year for three years as lawmakers experimented with different seasons and price limits in an attempt to gauge shopper response and the costs to state and local governments. Then on March 1, 2000, New York switched to a permanent sales tax exemption for clothing and footwear selling for less than $110. Participation by local governments is still optional.

Florida was the second state to approve a sales tax holiday in 1998. Supporters touted the idea as a way to provide tax relief to families who spend hundreds of dollars shopping for "back-to-school" clothes. They were convincing, and the first sales tax holiday exempted clothing under $50 from the sales tax for one week in August. Lawmakers have approved two additional sales tax holidays since that time and raised the price limit to $100.

The Texas Legislature followed in 1999 and enacted an annual back-to-school sales tax moratorium on clothing and shoes costing less than $100. Interestingly, this legislation had a new twist: It made the holiday an annual...