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Ohio’s sales-tax holiday success, study shows
By Marc Kovac
COLUMBUS
Ohio’s inaugural back-to-school, sales-tax holiday boosted sales-tax collections by $4.7 million, according to a study released by the University of Cincinnati’s Economic Center.
The group also said consumers saved $3.3 million during the August event.
Julie Heath, Economics Center director, told Ohio Senate’s Ways and Means Committee this week “the strength of the positive effect of the sales-tax holiday on tax revenues” was surprising, and, “We do not know if the trend will continue. It could be the case that consumers experienced an ‘exuberance’ of sorts in this first year, and subsequent years will be characterized by a more educated, experienced consumer.”
But, she added, “On the other hand, as consumers become more accustomed to the sales-tax holiday, it could take on a Black Friday aspect, representing an anticipated event, continuing to drive additional sales on nonexempt items and pulling customers from surrounding states.”
Heath provided testimony on legislation to make the sales-tax holiday permanent, after a trial run in 2015.
The three-day event limited the sales-tax exemption to clothing items priced up to $75 and school supplies and instructional materials up to $20, whether purchased in stores or through online retailers.
The exemption did not cover computers and other electronics, sports equipment, clothing and hair accessories or higher-priced clothing and supplies.
About 17 other states have comparable sales-tax holidays in place, most with limits similar to Ohio’s. The closest are Tennessee and Virginia, though Pennsylvania has no sales tax on clothing purchases.
Opponents of sales-tax holidays have focused on the resulting lost revenues, saying reduced sales-tax collections negatively affects state services.
But proponents have countered that sales-tax holidays should lead to an overall sales boost, with consumers eating out, buying gasoline and making other purchases while they seek out school supplies.
Sen. Kevin Bacon, R-Columbus, a Defiance native, said last year’s event appears to have been a success.
“I can tell you in my conversations with the retailers that ... it was very positive results – increases across the board,” he told the Senate’s Ways and Means Committee.
The latter panel is considering Bacon’s SB 264, which would make the sales-tax holiday permanent, under the same provisions as last year’s event. Bacon is hoping for passage of the legislation by May, allowing time to enact the holiday in August.
Heath said initial analysis by the University of Cincinnati’s Economics Center showed an overall increase of about 6.5 percent in retail sales, thanks to the sales-tax holiday.