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D.C. gets a sales tax holiday; Texas wants to
expand its current tax-free weekend
By Kay Bell • Bankrate.com
Texas Comptroller Carole Keeton Rylander wants
the state's sales tax holiday expanded to five days and thinks more
items should be exempt from taxation.
Currently, Texas shoppers don't have to pay
the state's 6.25 percent sales tax on select items purchased for
less than $100 on the first Friday, Saturday and Sunday in August.
Most local governments also waive collection of their added sales
fees. The tax-free weekend was initiated in 1999, and state officials
say shoppers have saved $69.6 million over the last two years.
But Rylander says the shopping list of tax-free
items is too narrow. The choice of the first weekend in August was
designed to coincide with back-to-school shopping needs. School
supplies, however, are not exempt from the tax. Rylander wants them
added, along with safety equipment and material and other sewing
items used to make clothes. The $100 price cap for all items would
continue except for safety equipment, which would be tax-free whatever
its cost.
In addition to broadening the variety of sales-tax-free
goods, shoppers also would benefit from having more time to shop
under the comptroller's plan. "By expanding the holiday from three
days to five and adding these items," says Rylander, "the sales
tax holiday will be less of a traffic jam and save Texans more of
their hard-earned dollars for their families."
Taxation of school goods
in original bill a mistake
Senate Finance Chairman Rodney Ellis said it was an oversight in
1999 when state lawmakers left school supplies off the sales tax
holiday list. Ellis said there is strong support for expanding the
holiday, but said he would like to wait until legislators have a
better idea of the state's total budget. Rylander's estimates show
that her proposal would save taxpayers -- and cost the Texas treasury
-- an additional $46 million from 2001 to 2003.
Click here
for a list of items currently exempt during the Texas sales tax
holiday. If lawmakers agree with Rylander, the following would be
added: backpacks, calculators, pencils, pens, crayons, markers,
highlighters, erasers, scissors, notebooks, tracing and construction
paper, clipboards, containers for school supplies, glue, adhesive
tape, reference books, fabric, patterns, thread, elastic, buttons,
zippers, snaps, car safety seats, bike helmets and elbow and knee
pads.
Washington, DC, gets a
break, too
While Texans look to expand their tax holiday, District of Columbia
bargain hunters will be getting their first back-to-school tax-free
shopping event this fall.
The Sales Tax Holiday Act creates a sale-tax-free
holiday for certain goods purchased between Friday, Aug. 3, and
Sunday, Aug. 12. Those days, any school supply or clothing costing
less than $101 will be exempt from the District's 5.75 percent sales
tax.
The law defines clothing as an "article of wearing
apparel for humans," including all footwear except skis, swim fins,
roller blades, and skates. A school supply is an item purchased
for use in a classroom, at home or for any school activity. This
specifically includes pens, pencils, stationery, book bags, lunch
boxes and calculators.
The sales-tax exemption applies to each eligible
item, regardless of how many items are sold on the same invoice
to a customer. Buyers can get the break for items they place on
layaway as long as the arrangements are made during the sales-tax
holiday period. And if a customer has a rain check issued earlier,
purchase of a tax-exempt item with the voucher during that August
time frame also qualifies as tax-free.
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