Economy
3:25 pm
Thu August 1, 2013

Jury Still Out On Missouri Sales Tax Holidays - Are You Shopping This Weekend?

Ready, set, shop. 

A new school year is approaching, and shoppers will head to stores this weekend for a tax-free holiday on school supplies, electronics and some clothing. 

Credit (via Flickr/andrewarchy)

John Mollenkamp, acting director of the Missouri Department of Revenue, says shoppers can save up to 8 or 9 percent if local governments also participate in the tax breaks.

UMSL associate professor of economics Lea Kosnik said such sales make people excited to run to the stores and spend money they may not normally spend.

But there is still uncertainty about how much these sales tax holidays actually stimulate the economy.

“One of the good things, I suppose, about it is it’s kind of like a feel good factor—things that people probably consume and do a little bit more of than they should," Kosnik said.  "And so this tax-free weekend could help local businesses, but it might lead to some spending that you shouldn’t do. If anything, I feel like the behavioral economics side of this might reinforce that a tax-free weekend isn’t always as good as it sounds on paper.”

Businesses also may be more prone to increase prices or not have as substantial of sales during a tax-free holiday.

In addition to improving income for local businesses, helping low-income families and stimulating the economy are possible goals for such tax breaks. But Kosnik said the information just isn't there to find out if the breaks are effective. 

“I do think that the data would help to make it more efficient for sure," she said. "It’s hard to say right now exactly how efficient or inefficient it is. But if we have the data, then if it is efficient we can increase the areas where it’s working best, or if we found out it was inefficient in certain areas, then maybe we could vote to repeal it. Data would be great for helping with the efficiency of the tax-free weekend.”

Revenue Department spokeswoman Michelle Gleba told the St. Louis Post-Dispatch that the department does not keep data on tax savings during these holidays.

Several states have ended their sales tax holidays, citing the lack of economic stimulus and the need for broader tax reform, including New York, North Carolina, and Illinois. North Carolina will have their final tax-exempt weekend this weekend, a tax reform effort made recently.

  • Find out what, exactly, is tax-free here.

Follow Kristi Luther on Twitter: @kaluther