Sales tax holidays | Arkansas Blog

Monday, July 26, 2010

Sales tax holidays

Posted By on Mon, Jul 26, 2010 at 8:26 AM

The movement for sales tax holidays hasn't gained much ground in Arkansas, but I've always been skeptical about it, particularly arguments that we must fall in line lest we lose business to neighboring states.

File this away for the legislative session, when the idea is sure to resurface, a report from the Tax Foundation:


At first glance, sales tax holidays seem like great policy. They enjoy broad political support, with backers arguing that holidays are a highly visible form of tax cut and provide benefits to low-income consumers. Politicians and other supporters routinely claim that sales tax holi­days improve sales for retailers, create jobs, and promote economic growth.

Despite their political popularity, sales tax holidays are based on poor tax policy and distract policymakers and taxpayers from real, permanent, and economically beneficial tax reform. Sales tax holidays introduce unjustifi­able government distortions into the economy without providing any significant boost to the economy. They represent a real cost for busi­nesses without providing substantial benefits. They are also an inefficient means of helping low-income consumers and an ineffective means of providing savings to consumers.

There's plenty more at the link.

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