Chrissie Thompson reports:
Ohio would offer back-to-school shopping free of state and local sales tax under a GOP state senator’s proposal, intended in part to lure business from surrounding states such as Kentucky.
The bill, sponsored by Sen. Kevin Bacon, R-Minerva Park, would declare the first Friday, Saturday and Sunday in August free of sales tax on back-to-school items. Qualifying purchases would include school supplies that cost $20 or less per item, clothing that costs $100 or less and school-related electronics, such as computers, that cost $750 or less.
Eighteen states have a sales tax holiday, according to the Economics Center at the University of Cincinnati, but none of them border Ohio.
“Consumers from other states will be incentivized to travel to Ohio to take advantage of these savings, and, while here, will also likely purchase other goods and services that are taxable,” said Lora Miller, a spokesperson for the Ohio Council of Retail Merchants.
The average U.S. family with school-age children spends about $700 on back-to-school shopping, according to the National Retail Federation. So a family shopping in Hamilton County could save about $47 if it can forgo paying the 5.75 percent state and 1 percent local sales tax.
Since shoppers often buy unexpected items they see in a store, the tax holiday wouldn’t hurt the state’s total annual sales tax revenue, according to a study by UC’s Economics Center. Shoppers in stores would likely buy items not included in the tax break: snacks, expensive backpacks and organizational supplies, for instance. That would make up for the loss in sales tax revenue, the study says.
The impact on the economy and tax revenue might be different if a state bordering Ohio, such as Kentucky, were to propose a sales tax holiday, the UC study said. UC recommended that “certain locations frequented by out-of-state visitors be excluded” from the sales tax break, but the bill currently includes all parts of Ohio.
Kentucky lawmakers have considered tax-free holidays, and Gov. Steve Beshear has supported one for back-to-school shopping. But the state has not implemented the idea. A tax reform commission assembled last year by Beshear didn’t recommend a tax-free shopping weekend.
The tax holiday has been proposed multiple times in the Ohio Legislature without becoming law. Now that several other states have created tax-free weekends, Bacon said, lawmakers can consider data, which show sales tax revenues won’t suffer, and retailers will benefit.
Macy’s, a member of the retailers’ group, supports the proposal. In other states with tax holidays, Macy’s customers “eagerly anticipate” the shopping weekend, the Cincinnati-based department store said in a statement.
Enquirer reporter Scott Wartman contributed.