Economist says tax-free weekends don't help state financially - WFXG FOX 54 - News Now

Economist says tax-free weekends don't help state financially

Clothes, computers, and school supplies go tax-free Aug. 1-3. (Source: WAFF) Clothes, computers, and school supplies go tax-free Aug. 1-3. (Source: WAFF)
HUNTSVILLE, AL (WAFF) -

Everyone loves bargains - and during the back-to-school season, thousands of Alabamians flock to the shops to stock up on backpacks, clothes, and school supplies. This year's tax-free weekend runs August 1 - 3  it is the state's ninth year participating.

But does the tax-free weekend do more harm to the economy than good? People save money, but the government loses out on the tax dollars.

"If you have to offer a tax holiday from your tax system, then there is probably something wrong with your tax system to begin with," said economist Liz Malm.

Malm said people rushing to the stores on this particular weekend, means the state will lose out on untold numbers of sales tax money.

"Why provide tax relief one weekend a year, when it doesn't do any good for the economy?" she said.

However, some consumers feel that timing is everything. So, too, do merchants.

"With back to school starting, everyone is looking to save a little bit of money," said Stephen Watford, general manager of the Huntsville Best Buy store. "The State of Alabama is offering a little bit of help with that."

Malm said people are holding off on making purchases until this weekend - which isn't helping the economy. We found a Huntsville-area shopper who said he was doing just that.

"I found myself purposely not buying anything for the past couple of weeks, just to save up for this weekend," Watkins said.

"The economic evidence shows they don't really do much to increase consumption or purchasing overall," argued Malm.

Malm said the best solution, in her opinion, is to keep taxes low 365 days a year, not just having one special weekend. But for now, tax-free weekends are still the "order" of the day.

"The tax benefit is only one time a year, so I think everyone should take advantage of it," said Watford.

Remember that not everything on the sales floor is eligible for the tax exemption. Click here for a PDF copy of the reference sheet of exempt and non-exempt items.

Local taxes may still apply to purchases; click here for a list of participating and non-participating municipalities.

Copyright 2014 WAFF. All rights reserved.

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  • Resources

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    Sunday, July 27 2014 5:37 PM EDT2014-07-27 21:37:52 GMT
    Sunday, July 27 2014 5:37 PM EDT2014-07-27 21:37:52 GMT
    Tax holiday guide (PDF)Local participationMore >>
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