Illinoisans are not getting a break on back-to-school supplies such as those in more than a dozen states enjoying tax-free holidays. While some supporters say tax-exempt events are good for consumers and businesses, others contend they're not worth the hype.
Eighteen states are offering tax-free holidays for back-to-school shopping, and policy expert Cara Griffith, editor in chief of Tax Analysts, said the benefits are debatable.
"From an actual revenue standpoint, businesses might see more revenue. States are certainly going to take a revenue loss in terms of the taxes they would have received," she said. "But I think, at the end of the day, the real benefit of these are (that) they are incredibly politically popular because it sounds like you are doing a really good thing for consumers."
According to the Institute on Taxation and Economic Policy, sales-tax holidays cost states about $300 million annually. But research from the University of Cincinnati Economics Center estimated an almost 5 percent boost in sales during a sales tax holiday, with average families saving about $38. Illinois offered a tax-free weekend in 2010, but pulled the plug the following year, with state leaders citing too many unpaid bills as the reason.
Griffith agreed that there is a benefit for shoppers, but said any boost for retailers is really just a shift in sales.
"They might see a spike, but what they're also going to see is a corresponding decrease prior to the sales-tax holiday," she said. "They'll see a spike during the sales-tax holiday of revenue, and then it goes back down. So what the sales tax holidays do is really just accelerate consumer spending."
Griffith said Illinoisans wanting to take advantage of tax exemptions always can cross the state border.
"Consumers are so mobile these days that, you know, if one state does a sales-tax holiday, well, they're just going to go ahead and drive there and take advantage of that," she said. "So states that are not doing sales tax holidays, they're certainly not missing out."
Iowa and Missouri are among the 18 states offering back-to-school sales-tax holidays this year.