Editorial Criticizes Illinois Tax Holiday Plan

April 28, 2008

As Senators Obama and McCain spar over whether a temporary gas tax suspension is a “solution” or a “scheme,” the Bloomington Pantagraph has an editorial pointing out the often-ignored problems with temporary tax suspensions:

Members of the Illinois Senate seemed to be thinking more about their own re-elections rather than the state’s finances – or even the public’s finances – when they approved a 10-day “back-to-school” tax holiday.[…]

For the most part, these are items that would have been purchased anyway, so it will not be generating additional sales.

Retailers are unlikely to add employees for the 10-day period that wouldn’t have been added or given extra working hours for the back-to-school rush anyway.

In fact, by concentrating purchases in a 10-day period rather than spreading them out, it could have the opposite effect – resulting in reduced working hours for employees if shopping volume drops considerably after the “holiday” ends.[…]

When it comes to something like a sales tax, there is no easy way – and arguably no legal way – to distinguish between those who are in need and those who aren’t, those who have school children and those who don’t.

In fact, we pity the poor retailers having to reprogram their computers or have a list at every register to determine what constitutes “qualified merchandise” under the bill.

If this “feel good” legislation is approved, it’s lawmakers who should go back to school – for a remedial course in math.

Read the entire editorial here. Read more on the problems associated with sales tax holidays here, here, and here.

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