Tax holiday helps stores, shoppers
The holiday cut total sales tax roughly in half on some items.
Aug. 10, 2009
Columbia businesses got a boost over the weekend thanks to an annual state sales tax holiday on school supplies and other items that comes just weeks before classes are to set begin.
The holiday, which roughly halved the total sales tax in Columbia on school-related purchases, increased customer traffic at some area stores, but local businesspeople thought the increase would have been larger if Columbia had also made the items exempt from city sales taxes as well.
MU Associate Director of Academic Resources Paul Musket said though some people pre-ordered items and waited until the tax holiday to pay for them, foot traffic at the MU Bookstore was slow for much of the weekend.
“It’s probably going to be down from last year,” Musket said. “The tax holiday always helps, but with the local opting out, some people may have gone ahead and bought things earlier.”
With back-to-school shopping list in hand, many families flocked to area stores to take advantage of the holiday, which suspends the state sales tax of 4.225 percent on some purchases during the first weekend of August each year. Among the items exempt from state taxes were clothing priced less than $100, school supplies less than $50 and personal computers less than $3,500.
Cities and counties can also offer similar tax exemptions or opt out of the program by enacting a local ordinance. According to the Department of Revenue, 172 cities and 52 counties have opted out. Columbia and Boone County do not suspend their sales taxes, which equal 3.225 percent, during the holiday.
Columbia city spokeswoman Toni Messina said in an e-mail Columbia does not suspend local taxes because that would add additional strain to the city budget. The budget, released last week, predicts no growth in sales taxes collected from local business in the coming year.
“The city continues to opt out of sales tax holidays because of their effect on local revenues,” Messina said. “Opting in to the holiday would only worsen that condition and have an even greater effect on local services.”
Penny Sherrick, office manager at the Columbia Computer Center, said customer traffic at the store had been slow recently but the increased savings from the state tax holiday had helped the store’s business.
“We sold a lot of systems and laptops this weekend,” Sherrick said. “The past couple weeks had been slow, so I think people were waiting for that weekend.”
In a news release from the Department of Revenue, Gov. Jay Nixon said the holiday, enacted in 2005, is also important for shoppers as the sluggish national economy starts to recover.
“During these times when every dollar counts, it makes sense to save as much money as possible,” Nixon said. “This holiday provides an excellent opportunity to accomplish that goal.”
Kenny Wiley, a sophomore political science major who will also be a peer advisor in Excellence residence hall this year, said the timing of the holiday, before students in his hall return, made it more convenient for him to get needed supplies at the MU Bookstore.
“It seemed like a really good weekend to buy stuff and get it out of the way,” he said.
Browsing through binders at Staples, Columbia resident Uzma Khan said the holiday was a big factor in her decision to shop this weekend. Her daughters, Sarah and Zoya Khan attend Columbia Independent School and made sure they were prepared to take advantage of the savings.
“We even asked the school to print off the lists early,” Sarah Khan said.
Columbia resident Teresa Smith, who was shopping for children’s clothing at Wal-Mart, said a local tax exemption would have helped, but that she was still happy about saving on some sales taxes as she shopped for her children, Zachary and Lindsey, who attend Lee Elementary School.
“It’s not as big a savings,” Teresa Smith said, “but it’s something.”