TALLAHASSEE --- Praised by retailers, derided as a gimmick by critics, Florida on Friday will start a month-long sales-tax “holiday” for back-to-school shoppers, along with eliminating sales taxes on other types of items.
While Florida has held back-to-school tax holidays of varying lengths in most years, lawmakers this spring approved making it an every-August occurrence. Shoppers will be able to avoid paying sales taxes on clothes, shoes and backpacks that cost $100 or less, school supplies that cost $50 or less, learning aids that cost $30 or less and personal computers that cost $1,500 or less.
The Florida Retail Federation said parents of kindergarten through 12th-grade students are projected to spend an average of $858 on clothes and supplies nationally. For families with college students, the average increases to $1,326. Electronics makes up the largest portion of the expenses, followed by clothes for K-12 students.
“This is always a very popular holiday for retailers,” Lorena Holley, general counsel and vice president of the Florida Retail Federation, said. “They run additional promotions and always expect large crowds.”
Not everyone is enamored, however, with tax holidays.
The Washington, D.C.-based Institute on Taxation and Economic Policy argues the discount periods have minimal benefit for working families.
“Wealthier taxpayers are often best positioned to benefit from a temporary exemption since they have more flexibility to shift the timing of their purchases to take advantage of the tax break --- an option that isn’t available to families living paycheck to paycheck,” Miles Trinidad, a state analyst for the non-profit organization, wrote July 17.
The business-friendly Washington, D.C.-based Tax Foundation said last week that making the back-to-school holiday a recurring month-long event, rather than requiring annual approval, gives retailers more certainty about the length and the items that will be included.
But the foundation also raised concerns about such holidays, saying targeted items are offered when demand is highest, “such as back-to-school products in August and hurricane preparedness supplies before storm seasons.”
“As a result, most of these revenue losses are associated with retail transactions that would have occurred without the added incentive,” wrote Katherine Loughead, a foundation senior policy analyst and research manager, and foundation intern Brayden Myers. “The prevalence of sales tax holidays is indicative of deeper structural weaknesses in state tax codes: the existence of a sales tax holiday is a tacit admission that the sales tax is overly burdensome throughout the rest of the year.”
The back-to-school holiday was included in a broader tax package (HB 7031) that the Legislature passed last month after a lengthy standoff between House and Senate leaders about a budget and tax cuts. House leaders initially wanted an across-the-board cut in the state’s sales-tax rate and opposed holding tax holidays.
Holley credited lobbying by the retail federation and other groups for making sure “we maintained the sales tax holiday.”
“We were confident that in the end, we would get where we landed,” Holley said.
The tax package, also starting Friday, will create permanent sales-tax exemptions on a variety of items, such as batteries, portable generators, tarps, gas cans, life jackets, bicycle helmets, sunscreen and insect repellent.
Previously, such items were included in tax holidays held at the start of the hurricane season for disaster-preparedness supplies and in the summer for recreational activities.
First created in 1998, back-to-school holidays have been held annually since 2010. They were not held in 2008 and 2009 as the state struggled with budget problems during the recession.
While tax holidays have been popular with shoppers and retailers, House Speaker Daniel Perez, R-Miami, didn’t embrace them this year. When the legislative session opened on March 4, he directed House budget leaders to “dive into the budget and find real savings in recurring revenue.”
“We spend every new dime of recurring revenue while congratulating ourselves for giving easy-to-fund non-recurring sales tax holidays,” Perez said at the time.
But Senate President Ben Albritton, R-Wauchula, contended the holidays “are popular and highly utilized.”
“Creating a permanent tax holiday every August on clothing, shoes, school supplies, and personal computers expands our current holiday and creates a consistency that benefits both consumers and retailers,” Albritton said as the tax package was signed by Gov. Ron DeSantis on June 30.
The package does not include the House’s proposal to cut the overall sales-tax rate. The largest part of the tax package will eliminate a tax on commercial leases, a change long sought by business groups.
The back-to-school holiday is projected to save shoppers $217 million a year.
The package also includes a sales-tax holiday from Sept. 8 through Dec. 31 on firearms, ammunition and such things as fishing and camping supplies.