Today, the New Orleans Times-Picayune interviews unforeseen critics of Louisiana’s sales tax holiday on guns and ammunition:
“Because of this we’ve had a downtrend all week,” [Morey Butler, a co-owner of 10-8 Tactical Gear & Supply] said. “It affects the way business is being run. It impacts your immediate potential for income.”
Butler’s shop does not typically open on Sunday, but he said he plans to open and staff the store that day to make up for sales he lost during the week. The store typically breaks even during taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. holidays, he said, because consumers tend to wait or make earlier purchases to reap the tax savings.[…]
Tom Mincher, owner of American Hunter Gun & Archery in Covington said he hoped for a slight uptick in business but expected standard sales for the week. ”Especially with the economy the way it is, guys who were going to buy stuff a couple of weeks ago will just wait,’ Mincher said.”
As noted in our Special Report on Sales Tax Holidays, the state’s “Second Amendment Weekend” was signed into law earlier this year as a way of making a political statement about the Second Amendment. The article included an interview with Tax Foundation experts:
“This is an inappropriate use of the tax code,” said Joseph Henchman, the foundation’s director of state projects. “The tax code should be used for raising revenue…, not affecting behaviors.”[…]
Describing the holiday as “a subsidy for gun buyers paid for by nongun buyers,” Tax Foundation economist Mark Robyn criticized the state for providing preferential treatment to a single industry.
“The government should be acting in a neutral way toward all purchases,” Robyn said.
As we have mentioned before, sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of purchases. As the gun store owners make clear, sales tax holidays create complexities for tax code compliance, efficient labor allocation, and inventory management. Most sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. holidays, this one included, involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating between products and across time, and distorting consumer decisions.
For more information on sales tax holidays, read our recently released Special Report No. 171, “Sales Tax Holidays: Politically Expedient but Poor Tax Policy,” or also or listen to Mark Robyn’s podcast on the topic.
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