It’s August people. Let’s get real. It’s Back to School time.
This Back to School season is a little bit different than the ones in the past though.
First off, I’m also going back to school. I’m starting a PhD program at UIC. I’m doing it part-time, very part-time to start in fact. So as I prepare my daughter to head off to second grade, I’m making sure that I have my own notebook, text book and pens ready to roll. And honestly, they’ve been ready for a year since I’m a school supply addict.
That brings me to the second reason this year’s back to school season is different…We’re all getting a tax break!
…a new Illinois law that waives the state sales tax for 10 days next month.
While back-to-school shoppers won’t have to pay the 5 percent state share of the sales tax, they will still be charged the county and city portion. In Chicago, that means the sales tax rate will be 4.75 percent for clothes and school supplies from Aug. 6-15. [link]
Our friends in the Quad Cities get it even better as Iowa also has a tax holiday, which is a better deal than this side of the Mississippi. In fact Illinois’ modified tax holiday is the 18th in the country.
But is it a good thing?
For someone it is. The debate rages on whether or not this is a good thing for consumers or for retailers. But unless those of us shopping are also buying computers and other things not on the approved tax-holiday list [read all seven PDF pages!], the state seems to be the loser in this gimmick.
State Rep. Frank Mautino (D-Spring Valley) said the tax holiday will create a projected revenue shortfall of at least $50 million, and perhaps as much as $60 million. That money will have to be cut from some other area in the state’s operating budget. [link]
In the same article, State Sen. Gary Dahl notes that Wal-Mart heavily lobbied for this law which causes him to wonder if the holiday will help the every day taxpayer instead of just pad the profit margin of stores.
Georgia skipped a tax holiday this year for the first time since 2002. The state faces an estimated $371 million deficit for 2011. Its tax holiday last year, on clothing and school supplies including computers, cost an estimated $13.2 million in lost revenue, according to the state.
Policy analysts at both ends of the political spectrum say tax holidays are stunts that don’t boost the economy and hurt state budgets. [link]
No matter what, the tax holiday is happening. I really do hope that it helps those who need to save as much as they can, I hope it encourages those of us who can spend more, do spend more and in the end, in my ever Pollyanna-ish ways, that everyone comes out on top.