Friday, August 28, 2009

From "The Tulsa World" - Lawmakers Disagree with Report on Sales Tax Holiday

OKLAHOMA CITY — Some lawmakers disagree with a report that called sales-tax holidays a political gimmick.

The Washington, D.C.- based Tax Foundation this week released a report that is critical of the 16 states that offer sales-tax holidays.

The nonpartisan, nonprofit group that has monitored fiscal policy at the federal, state and local levels since 1937.

Oklahoma has had a sales-tax holiday for three years. This year's holiday, Aug. 7-9, exempted clothing and shoes priced at less than $100 from state, county and city taxes.

Last year, Oklahomans saved about $6.4 million during the three-day tax holiday, said Paula Ross, a spokeswoman for the Oklahoma Tax Commission.

The Tax Foundation's report called tax holidays "a gimmick" that distracts "policymakers and taxpayers from real, permanent, and economically beneficial tax reform. Their creation came about as a way to avoid addressing the negative effects of high sales taxes."

The study said sales-tax holidays do not promote economic growth or significantly increase consumer purchases.

Some retailers increase prices, essentially absorbing the benefit and reducing buyer savings, according to the Tax Foundation.

"Politicians claim that sales-tax holidays largely pay for themselves through increased economic activity and new collections," the Tax Foundation said. "But experience shows the claim of economic stimulus, increased revenue and consumer savings are greatly exaggerated."

Most sales-tax holiday shoppers see a modest windfall for something they would have bought anyway, the study found.

Oklahoma Sen. Jay Paul Gumm, D-Durant, a strong supporter of the state's sales-tax holiday, disagrees with the report's findings.

"I would invite this group to speak with the thousands of Oklahoma families who saved millions of dollars during the back-to-school sales-tax holiday," he said. "Perhaps then they might have a real-world view of what this policy means to real people and the budgets of real families."

Gumm does not believe that Oklahoma retailers increased prices for the sales-tax holiday.

"In most communities, retailers run specials to coincide with the sales-tax holiday, providing even greater savings for families," he said. "It also helps level the playing field for the middle- and low-income families by reducing the most regressive tax at one of the times of year when families spend the most."

Senate President Pro Tem Glenn Coffee, R-Oklahoma City, said the sales-tax holiday keeps revenue in Oklahoma as opposed to Texas, which also has a sales-tax holiday.

"It is about regional competition in this economic downturn," he said. "It helps promote the economy."

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