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Sales Tax News Week of January 26

This past week saw a lot of discussion about sales tax changes, both increases and decreases, as well as tax holidays. Many places are reporting a boon in tax revenues, despite what we so often hear.

Tax Holidays

Ohio will experience its first sales tax holiday in August of 2015. Like many states, Ohio has implemented a tax holiday on school supplies and clothing in an effort to save families money during their back-to-school shopping. Rep. Jim Buchy, who was one of the sponsors of the bill that made the holiday law, discusses why the holiday is so close to his heart. For more details, see http://ohiosalestaxholiday.weebly.com/.

Tennessee is looking to create a new sales tax holiday on an entirely different set of goods. Known as a “second amendment sales tax holiday”, the proposal would provide a sales tax holiday on firearms, ammunition, and similar goods. Texas has a similar bill in the works, while Mississippi’s is already in effect.

Proposed Sales Tax Repeals and Reductions

States aren’t always looking to add taxes, and a number of them are currently looking to reduce or repeal certain taxes. One example is the state of Connecticut, where Rep. Kelly Luxenberg (D), and Sen. Mae Flexer (D) have introduced a bill to repeal sales tax on diapers. Currently, baby diapers are taxed in Connecticut, but adult diapers are not. Their estimated savings are $300/child, a substantial amount for many young families.

Also on the potential cutting board is North Dakota’s tax on clothing. Neighboring states Minnesota and Montana don’t tax clothing, so North Dakota loses sales when its citizens cross state lines to make purchases.

Finally, Governor Rick Scott in Florida has proposed to get rid of sales tax on college textbooks, to alleviate some of the burden of higher education. He also wants to reduce sales tax on cable and phone, all part of a plan to cut more than $1 billion in taxes over the next two years.

Possible Sales Tax Increases

Other states are looking to increase their sales tax rates and revenue. Michigan is considering a statewide 1% tax rate increase, a hike that will be given to voters in May. Currently, a slight majority are in favor (46%, compared to 41% against). But Governor Rick Snyder has a long road ahead of him; his team of consultants tasked with promoting the effort recently quit abruptly. Although the team has been replaced, Detroit News columnist Nolan Finley believes the governor needs a better selling point.

Georgia is also split over a potential change to its gas tax, from a sales tax to a straight excise tax. The goal is to keep all of the tax dollars within the Department of Transportation, which it currently is not. But some people are against the move and say that it will increase the cost of gas at the pump.