Taxes and Other Revenues.

• Position: Brief Article

"Tax Holidays: A Slippery Slope"

Coburn, Karen Ann

Governing, November 2000, pp. 70-72.

New York State enacted the first sales tax holiday in 1997. Immediately after, several other states jumped on the bandwagon, and by the 2000 legislative session, 21 states had considered the concept. The sales tax holiday suspends the state sales tax for a defined period of time. Seven states have declared them "wildly successful." But amidst the excitement and approval of state legislators, consumers, and merchants, the effects of such tax breaks on municipal governments have been overlooked. There are 29 states with municipal governments that assess a sales tax. Despite the brevity of the holiday--most states that participate only remain tax-free for two to four days--the amount of revenue forgone amounts to millions of dollars. In 1999, Texas calculated a $25.6 million tax-revenue loss for its three-day holiday; Florida forfeited $34.7 million over nine days; and New York sacrificed $56 million over 15 days. Retailers like to point out that much of the revenue loss is made up through a rise in income tax r eceipts as stores hire more employees to meet the demands of the increased flow of shoppers. Additionally, the holiday may produce more revenue from corporate income taxes due to a higher level of...