On July 31 and Aug. 1, shoppers will not pay sales tax on clothes and shoes that cost less than $100 as Mississippi joins several other states offering “sales tax holidays” designed to help families with back-to-school costs.
The Legislature passed House Bill 348 with only three dissenting votes in the House of Representatives and none in the Senate and Gov. Haley Barbour signed it into law. The bill also will help others who want to buy clothes. But it does not cover jewelry or accessories such as handbags, umbrellas, wallets, watches, backpacks, briefcases, garment bags and similar items.
Three neighboring states have tax-free shopping days, which some lawmakers believed were causing many locals to buy out of state. It was especially a problem in Mississippi, which has shopping hubs in Memphis, New Orleans and Mobile in close proximity, and all of those cities are in states with tax holidays. In the last few years Louisiana, Alabama, Tennessee and 14 other states have implemented at least one sales tax holiday period per year.
The Alabama law allows counties and cities that might lose sales tax revenue in some cases to opt out of the holiday, but the Mobile area participates, as do stores in Slidell and New Orleans. Alabama has allowed tax-free purchases on clothes costing up to $100, computers of up to $750, school supplies up to $50 and books up to $30 for a three-day period.
“We were losing out,” said Sen. Michael Watson, R-Pascagoula,Watson sponsored his own bill, but it died. He wanted tax exemptions for school supplies in addition to clothes. But he agreed with other lawmakers who advised him most would easily go for the version of the bill that eventually passed and it would be better to work on other portions later. It was tricky for lawmakers to pass the bill, which has been debated for many years, so Watson said he was content to take up the school-supplies portion next year.
Some tax officials in Mississippi had been hesitant about the sales-tax holidays. They have said in many cases, when the holidays are in place, retailers don’t offer as many sales. Some opponents said the tax was harder for smaller stores because they have to calibrate computers for only a few days and also have systems to make sure certain items qualify, so meeting those requirements might be easier for larger chain stores.
South Mississippi representatives Herb Frierson, R-Poplarville, Mark Formby, R-Picayune, and Brandon Jones, R-Pascagoula, all were co-sponsors of House Bill 348, with some others.
The new Mississippi law does allow municipalities, which would lose the sales taxes on those days, to vote to suspend the sales-tax holidays next year. But Frierson said he believes locals would be angry with officials who put a stop to the savings. He said the sales-tax holidays also are needed to spur buying, which helps the reeling economy.
“If we ever get the recovery started, it is going to have to start with consumer spending,” Frierson said.