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Sales tax holiday a boon for local biz


The state hopes its annual sales tax holiday, Aug. 7-9, will provide relief to shoppers and businesses during an economic down time.

“Really, it ends up being about a 10 percent discount, once you remove the state and local sales tax,” Sophie Moery, Tennessee Department of Revenue, said.

“From the consumer perspective, I think it’s beneficial to encourage people to buy and get ready for their kids to go to school, and particularly during a recessionary period … to save above and beyond normal,” Farragut Business Alliance founder David Purvis said.

“It stimulates the economy,” he added.


“In tough times, it’s great that the Town and the businesses are supporting it,” Farragut West Knox Chamber of Commerce president and CEO Bettye Sisco said.

Gov. Phil Bredesen first proposed the sales tax holiday as a time of relief for back-to-school shoppers in 2005; the first weekend was held in 2006.

Although the holiday was first conceived of as a back-to-school relief weekend, it is not restricted to strictly back-to-school items, and anyone can take advantage of the holiday.

Generally, clothing that costs $100 or less per item and school and art supplies that are $100 or less per item are tax-free.

Computers under $1,500 also are tax free, but only if they are purchased as a bundle. Computer parts purchased separately are not covered.

Purvis said even stores whose items don’t qualify as tax-free often attract customers by having sales.

“There are only certain items that really classify under that program. But other businesses, we’re finding too, are doing no sales tax. In other words, they’re offering discounts to equal sales tax,” Purvis said.

“I think that’s good for the whole community to participate in that, even if all the goods you sell don’t classify as school goods,” he added.

“Retailers take advantage of this as well and put things on sale that aren’t eligible for the holiday. So it ends up being a really, really good savings opportunity for everybody,” Moery said.

Although the sales tax holiday is held statewide, shopping locally still helps local businesses and governments.

“It’s a terrific savings to consumers. It’s another opportunity for them to see places they haven’t seen in Farragut, and not only see it, but get a savings as well,” Sisco said.

“I would encourage everyone to go into businesses they aren’t familiar with and see what opportunities they have,” she added.

Local governments are held harmless during these weekends, meaning after local businesses report their sales that would have had sales tax, the state pays municipalities the local sales tax they would have collected.

“It’s a really good deal for them,” Moery said.

“Everybody is having a hard time right now at the state and local level, but it’s a lot harder on the locals because they just don’t have as big of budgets anyway,” she added.

The uncollected sales tax is accounted for in the state budget as “foregone revenue.”

“We are prepared at the state level to accept that loss,” Moery said.

Other sales tax holidays, often held in April, have been one-time holidays enacted by the legislature. This year, there won’t be one.

Because there is only one sales tax holiday planned for this year, the state Department of Revenue is expecting savings of $12 to 14 million over the weekend.

For more information and for a comprehensive list of items you won’t have to pay sales tax for this weekend, visit www.tntaxholiday.com

 

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