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Sales Tax Holiday: Your gain, state’s loss

The annual Sales Tax Holiday happening July 28th and 29th is something parents preparing kids for school look forward to every year. Stores have sales, you’ve been saving up, and there’s no sales tax to worry with. Since you’re more likely to eat out, grab other non-tax exempt items, and swing by the convenience store on these annual shopping holidays, the economy is getting boosted, right?

Actually, there’s not an answer to that.

“Shoppers aren’t required to report the sales tax exemption for the Sales Tax Holiday,” said Kathy Waterbury with the Mississippi Department of Revenue. “But with there being no sales tax on select items for two days, there is a loss to the state there.”

The magnitude of the loss is unknown, as business owners are not required to report the sales tax they didn’t collect. While businesses outside of retail are visited and non-exempt items are still purchased, what boost may exist may or may not override the loss the state takes on those two days.

So why have an event that hurts the state’s bottom line?

“This is a holiday for the people,” said Waterbury. “The legislature decided that these two days are for those who need to get things in order, get ready for back to school, grab some clothes, and save some money.”

Outside organizations have explained that the sales tax holidays for clothes and hunting supplies actually hurt the state, and recommend that they be discontinued.

“We’re going to keep doing this until the legislature decides otherwise,” said Waterbury. “This makes the 9th year, and we’ll keep it going.”

For a list of items that are eligible for tax exemption, click here.

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