On Tax Holidays for Hurricanes and Gasoline

May 27, 2011

Virginia’s hurricane and emergency preparedness sales tax holiday is here again! It’s a bad, gimmicky policy, but if you need a generator you could save up to $50 buying it now. Going to pick up some bottled water or duct tape? Those qualify as well. If you’re a Virginia retailer that sells any qualifying items (like batteries or cell phone chargers), make sure you comply with the 13 page guidelines and rules, as participation is not voluntary.

In other tax holiday news, New Hampshire policymakers recently rejected a proposal for a gas sales tax holiday from the end of may through June. Well, a partial holiday. It would have reduce the gasoline excise tax from 18 cents to 13 cents per gallon, saving residents $7 million, or an average of $5.32 each. According to the AP, “Republican leadership in the House argued they’d run on a platform of cutting taxes and should make good on their promise.”

It is fine to want to cut taxes, but a $5 per person cut in the gas excise is only a tax cut in the strictest academic sense (assuming prices even fall by the full reduction in the rate, which experts agree is in unlikely). Even if they had managed to get this bad policy through, it is hard to see taxpayers agreeing that such a gimmick would fulfill the tax cut promises.

As we have pointed out before, sales tax holidays and gas tax holidays are poor policy. They don’t deliver on their grand promises and basically exist solely to win political points. If policymakers are going to claim to cut or reform taxes, they need to focus on real tax reform and real cuts.

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