Study Of 2004 Sales Tax Holiday Shows No Harm To State Tax Revenues

Lawmakers who are considering a repeat of the 2004 back-to-school Sales Tax Holiday are getting some numbers to look over. A study conducted for the Missouri Chamber of Commerce Education Foundation shows city governments experienced an increase in sales tax revenue in Third Quarter 2004 over Third Quarter 2003 – with the biggest benefits going to those cities that did not opt out of special weekend. Cities that fully participated in the holiday experienced a 3.1 percent increase over 2003. Cities that opted out only saw a 2.2 percent increase over 2003. And, the Chamber’s Jeff Craver says state revenue numbers did not suffer at all. Data indicate state tax revenues for the Third Quarter 2004 were 1.9 percent of national sales – in line with the trend over the last four years. There is more positive economic news in that consumers bought taxable items in addition to the items that were tax exempt. This year’s proposed Sales Tax Holiday would not allow any cities or counties to opt out. All would be required to cut local sales taxes as well as state sales taxes during the back-to-school weekend holiday.