Proposals for a Sales Tax Holiday and Film Credits in Florida are More Hype Than Helpful

February 17, 2010

Two tax proposals are under consideration in Florida: a vastly expanded tax credit for film productions, and an annual “back-to-school” sales tax holiday. Both types of policies have experienced growing popularity in state legislatures in recent years because they supposedly provide a boost to the economy and provide jobs, but the truth is much less impressive. Our Fiscal Fact No. 210, “Florida’s Sales Tax Holiday and Film Tax Credit Proposals Will Not Deliver on Exaggerated Promises,” lays out the case against these proposals that turn out to be more hype than helpful, and may even be damaging to the state’s economy.

If lawmakers in the Sunshine state want to cut taxes they should pass broad-based tax cuts that do not favor the politically connected or discriminate between taxpayers based on what they buy or when they buy it.

For even more information on sales tax holidays check out this section of our site dedicated to the topic, and Tax Foundation Special Report No. 171: Sales Tax Holidays: Politically Expedient but Poor Tax Policy.

For more on film tax credits see here and Special Report No. 173: Movie Production Incentives: Blockbuster Support for Lackluster Policy.

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A 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.

Sales tax holidays are periods of time when selected goods are exempted from state (and sometimes local) sales taxes. Such holidays have become an annual event in many states, with exemptions for such targeted products as back-to-school supplies, clothing, computers, hurricane preparedness supplies, and more.

A tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly.