Thursday, July 31, 2008
Editorial: There's a lesson in the tax holiday
Lawmakers can sell any bad idea if they say it is for families.
From the RoundTable blog
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This year, more than most, the commonwealth's shoppers might appreciate the back-to-school sales-tax holiday that takes place this weekend. That does not make it any less a pathetic pander from lawmakers.
The General Assembly created the holiday in 2006. When it rolls around each year, shoppers do not pay the state sales tax on school supplies valued less than $20 and most clothing and shoes less than $100.
Calling it a "back-toschool" holiday is a bit misleading. Small businesses in need of office supplies can take advantage of the break. So can couples looking to spice up their relationships with some lingerie and stilettos -- they count as clothing and shoes but not sports or recreational equipment, which are not exempt.
Who could blame Virginians for shopping when they get about 5 percent off? A whole third of households might even have back-to-school expenses. As for the other two-thirds, a deal is a deal.
Besides, everything is so expensive these days. The stalled economy, housing slump and high gas prices have pinched household budgets. A few cents on the dollar this weekend could add up.
It will certainly add up in Richmond. Last year, the state lost $3.8 million thanks to the tax break. This year the Virginia Department of Taxation expects the revenue drop to exceed $4 million. That is not much in the grand scheme of the state budget, but Richmond could use every dollar it can get. Revenue keeps slipping, forcing tough cuts to valuable programs. Then there is the whole transportation shortfall.
Businesses, too, take a financial hit. Stores have to adjust their registers for the program, and many of them feel obliged to offer tax breaks on more than just the mandated items. They pay the taxes out of their own revenue.
No, the tax holiday has nothing to do with sound fiscal policy. It is all about diverting voter attention from the real problems confronting the state.
