Youngstown Daily Legal News

Bill would establish back-to-school sales tax holiday

TIFFANY L. PARKS
Special to the Legal News
Published: December 13, 2013

While the traditional holiday season conjures up thoughts of festive music, family gatherings and jolly old St. Nick, Sen. Kevin Bacon is looking to carve out a different holiday filled with backpacks, pencils and paper.

Senate Bill 243, sponsored by Bacon, R-Minerva Park, would establish a three-day, back-to-school sales tax holiday each August.

During the holiday, sales of back-to-school clothing, school supplies, personal computers and personal computer accessories would be exempt from sales and use taxes.

“The retail industry directly or indirectly supports one in four Ohio jobs, makes up approximately 18 percent of the state’s gross domestic product and employs more than one and a half million Ohioans,” Bacon said. “This is an important industry for Ohio and one we should promote.”

If signed into law, SB 243 would include a state sales tax suspension on the first Friday of August and the following Saturday and Sunday on school supplies such as pencils, pens, binders and lunch boxes priced $20 or less, pieces of clothing such as jeans, sweaters and jackets that retail for $100 or less and electronics such as electronic book readers, laptops and desktop computers tagged at $750 or less.

Under the bill, “clothing” would not include accessories or equipment, protective equipment, sports or recreational equipment, clothing that is rented or clothing that is used in a trade or business.

“Preparing our children properly for the first day of school is one of the foundational blocks to giving them a good education,” Bacon said. “In difficult economic times, Ohio families need every ounce of help we can give them to make sure that first day goes smoothly.”

Eighteen states, mostly southern, had a sales tax holiday in effect in 2012.

“Most of these states covered similar items seen in Ohio’s proposal such as clothing and school supplies,” Bacon said.

In studying the possibility of establishing such a holiday in Ohio, the Economics Center at the University of Cincinnati has indicated that a back-to-school sales tax suspension would inject up to $78 million into Ohio households.

The study estimated that retail sales would rise nearly 5 percent during the month of a three-day sales tax holiday weekend.

According to a post on the Economics Center’s blog, suspending sales taxes can be beneficial to the economy of a state largely because they draw individuals from other states.

“Since none of the states bordering Ohio have competing sales tax holidays, there is substantial reason to believe such an occurrence would bring purchasing power into Ohio,” the post reads.

“Though consumers in this state and others would benefit directly from a sales tax holiday (our study determined that the average household would save $38), the state government would lose this revenue.”

The post went on to state that research supports the claim that much of the change in sales tax collections would be offset by out-of-state consumers making purchases on taxable items while shopping in Ohio.

SB 243 isn’t the first measure to land in the legislature that proposes a back-to-school sales tax holiday.

In the last General Assembly, Reps. Matt Lundy and Ron Gerberry introduced House Bill 581 to establish a two-day sales tax suspension in August.

That proposal, like SB 243, stated that school supplies do not include furniture, items that are rented or tangible personal property for use in a trade or business.

HB 581, which only gained support from Democratic lawmakers, stalled after it was assigned to the House Ways and Means committee.

SB 243 is awaiting a committee assignment.

States already offering the sales tax break include Alabama, Arkansas, Connecticut, Florida, Georgia, Iowa, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia.

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