Tuesday, July 2, 2013

North Carolina's final tax-free weekend?

If you've been considering whether to buy clothing or a computer, North Carolina's retailers are hoping that next month's sales tax holiday will give you the nudge you need to make the buy.

But the North Carolina Retail Merchants Association is lobbying the legislature not to do away with the annual three-day suspension of the sales tax. Although there are different versions of tax reform in the state Senate, House, and governor's office, the Senate version of a tax bill would eliminate the holiday after this year.

The sales tax holiday is currently scheduled to run Aug. 2 - Aug. 4. Retailers like the sales tax-free weekend because it spurs shoppers to visit their stores and make purchases for the back-to-school season (Mecklenburg's sales tax is 7.25 percent, meaning you'll save $7.25 off $100 worth of goods if you don't have to pay the tax).

Many structure sales events around the weekend. The NCRMA said retailers in the state add 8,300 work-hours during the holiday, and that the tax holiday gives them the chance to compete with online retailers and surrounding states.

"Without this weekend, the state’s business climate will suffer significantly as our residents will travel across state lines to shop tax-free weekends in surrounding states," said NCRMA president Andy Ellen, in a statement.

However, opponents of the sales tax holiday say it only induces consumers to shift their spending by a few weeks, and doesn't generate new demand. Last year, the N.C. Department of Revenue estimated that the sales tax holiday cost the state $14.5 million in lost revenue.

Here's a summary of what the sales tax holiday covers: "Clothing, footwear, and school supplies of $100 or less per item; school instructional materials of $300 or less per item; sports and recreation equipment of $50 or less per item, computers of $3,500 or less per item; and computer supplies of $250 or less per item will be exempt." For a detailed list, click here.