Sales Tax Holiday a Sham?

Tennessee Sales Tax Holiday an “Insult to Taxpayers,” Says Think Tank“Sham” tax relief set to return less than 1% of surplus to taxpayers

NASHVILLE – Today is the first day of Tennessee’s second annual Sales Tax Holiday. But the tax holiday is no reason for celebration, according to the Tennessee Center for Policy Research, a Nashville-based free market think tank.

The tax holiday provides a statewide sales tax exemption for school and art supplies, clothing priced $100 or less per item and computers priced $1,500 or less. However, it will save the average Tennessean less than 50 cents.

On June 30, the state government ended the 2006-07 fiscal year with a surplus of more than $1.5 billion. This means the state overtaxed taxpayers an average of $250 for every man, woman and child in Tennessee. Rather than returning the entire surplus to taxpayers by reducing taxes, lawmakers squandered much of the surplus on wasteful pork projects.

“Taxpayers should view the tax holiday as an insult, not a gift,” according to Drew Johnson, president of the Tennessee Center for Policy Research. “We’re supposed to be grateful that the state is returning $11 million of the $1.5 billion it owes us? It’s a sham—a slap in the face.”
From August 3-5, the Sales Tax Holiday is expected to prevent the state government from taking an estimated $10-11 million in state sales tax from Tennesseans.

“If the governor and members of the legislature respected taxpayers’ money and practiced fiscal discipline, every person in the state would get hundreds of dollars back. Instead, we’re getting pocket change,” said Johnson.

The Tennessee Center for Policy Research recommends that Tennessee lawmakers pass legislation that automatically returns surplus money to taxpayers by reducing the sales tax on groceries and gasoline after topping off the state’s rainy day fund.