West Virginia Governor Vetoes Gun Sales Tax Holiday

April 6, 2010

Mark Robyn

Mark Robyn

West Virginia Governor Joe Manchin has vetoed a gun sales tax holiday proposal, citing concerns over the potential for lost revenue. Not only will the holiday cost the state an estimated $25,000 annually in untaxed gun purchases, but that the holiday may put the state in violation of the Streamlined Sales and Use Tax Agreement (SSUTA) resulting in the annual loss of $3 million in revenue from businesses that have agreed to abide by the SSUTA (more info on the SSUTA and the Streamlined Sales Tax Project).

Manchin is right to reject the gun sales tax holiday. Sales tax holidays are a political gimmick that only benefits a small minority of the population and there is no sound economic justification for such a policy. If lawmakers want to cut taxes, they should do so in a permanent and broad-based way, for example by cutting the general sales tax rate, thus benefitting all consumers regardless of what they buy or when they shop.

For more on sales tax holidays in general, see our Special Report on the topic. Here is some more on gun sales tax holidays.

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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 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.