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State and Local Government / Municipal Policy

Making The Most Of The Weekend

By Daniel Ritter on Aug 3, 2012

Missouri’s annual back-to-school sales tax holiday officially started last night at 12:01 a.m. Until midnight on Sunday, thousands of fashionistas, shopaholics, and back-to-school shoppers will be out in force capitalizing on the opportunity to purchase certain items without paying state sales tax.

Items exempted from the sales tax include school supplies under $50, clothes less than$100, software under $350, and computers and devices less than $3,500. There is no limit to the amount of items that can be purchased, but each item must be under the price threshold. For instance, if one purchases five shirts that are each under $100, then the discount is available for all five shirts.

This appears to be a win-win situation for everyone. Parents, students, and teachers can save money on most things that they need for the school year. And local businesses will experience an increase in sales as shoppers come over from Illinois, which is not participating in a sales tax holiday.

But as prior posts have pointed out, the sales tax holiday is far from perfect. First, it does not necessarily lead to more consumption because consumers often postpone certain purchases until the tax holiday weekend.  Second, some governments, including the state, lose out on millions in revenue because people wait to purchase certain items on the tax holiday.  Third, it puts some vendors within certain municipalities at a disadvantage because their cities opt out of the tax holiday, which means they still have to collect the local sales tax. Savvy consumers will shop at stores in municipalities where there is both a state and local sales tax exemption.

But do not feel bad.  Go out and buy what you need. It is your money and you have the right to take advantage of the sales tax weekend.  It would be great if the tax holiday led to more spending, but in tough economic times like these, I would rather see people keep more of their money than have the state waste it on some ridiculous economic development project. Just make sure you make the most out of this weekend by avoiding the cities, counties, and special districts that have opted out of the sales tax weekend.

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Daniel Ritter

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