Legislators toy with idea of tax holidays

DOR: Break would cost $14.5 million

Published On: Mar 28 2013 10:36:28 PM CDT   Updated On: Mar 29 2013 08:19:28 AM CDT

Some Republican lawmakers are pushing for Wisconsin to create sales tax holidays to boost business.

About one-third of states already have some form of tax holidays, with many in effect in August for back-to-school shopping, according to the national Federation of Tax Administrators.

The Republican's Assembly and Senate bills would exempt clothes, school supplies, teaching materials and computers from the state's 5.5 percent sales on tax on the first weekend in August. Energy Star-qualified appliances be eligible the first weekend in November.

Edgewood College Professor Moses Altsech said people already considering a new washer or dryer may move up that purchase to get the discount, although it may not be enough to get people who weren't already considering it to the store.

“They may see some increased traffic,” Altsech said. “Not because the real benefit to the consumer's bottom line is that great, but because psychologically you feel, this is the time to do it, a smart consumer's going to take advantage of this, why postpone it?”

The Wisconsin Department of Revenue said the state would lose out on $14.5 million in sales tax a year. That's a small fraction of the $4.2 billion in sales tax the state collects every year, Altsech said.

State Rep. Fred Clark, D-Sauk City, said he hasn't decided whether to support the bill, but said the tax revenue could help fund schools or go to job creation programs instead of a sales tax holiday.

The measure does include a provision allowing the Revenue Department to cancel the sales tax holiday on a certain year if the economy falters.

Retailers said they supported the bill.

"I think we could see twice as many people in the door or three times as many people in the door as we'd expect for a normal day," said Dennis Egbert, co-owner of Brothers Main Appliance and TV in Madison. "We will be very busy."

Egbert said he would pair other discounts with the sales tax revenue to bring customers into the store.