State boosts sales with back-to-school specials

By for CAES News

By Stephanie Schupska
University of Georgia

Kids don’t usually need an incentive to go back-to-school shopping, especially when it involves cool new stuff. Parents, though, usually do.

Georgia’s providing a boost again this year with its fourth tax- free holiday. The tax breaks will begin at 12:01 a.m. Thursday, July 28 and end at midnight, Sunday, July 31. And it’s not just parents who are looking forward to the tax break.

“Customers call a month or two in advance to see when that weekend is going to be,” said Jamie Waters, assistant manager at a Goody’s Family Clothing store in north Georgia. “Sales that weekend are just phenomenal.”

Goody’s moved up the grand opening of a new store in Commerce, Ga., from August to the tax-free weekend to take advantage of the sales.

Clothes and shoes are not the only items receiving a tax break. Other items include school supplies costing $20 or less per item, personal digital assistants not built into cell phones, computers up to $1,500 per transaction and some computer accessories and software. Children books and books that are on an approved school reading list and cost $20 or less get a break, too.

Digital cameras, cell phones, furniture and other recreational systems don’t qualify for the tax break. Accessories like watches, glasses and jewelry are also not tax exempt. But clothes and footwear ranging from pantyhose and roller blades to football pads and girdles are.

A complete list of what items are and aren’t tax exempt is available

“Obviously, it’s an added incentive to anybody who’s considering purchasing school supplies, computers and things like that,” said Keith Kightlinger, a tax economist with the University of Georgia Extension Service.“I think, especially when you look at the fact that this is publicized in advance, consumers can realize a substantial savings out of the tax- break weekend,” Kightlinger said.

The tax holiday, which was originally designed to pull Georgia out of an economic recession, favors certain sectors of the retail industry, said Jeffrey Humphreys, director of the UGA Selig Center for Economic Growth.

“Now the economy is comfortably out of the ditch,” he said. “Georgia’s not leading the nation, but we’re still growing.”

The increased spending over that weekend doesn’t necessarily mean that consumers have more disposable income.

“Just because it’s a sales tax holiday doesn’t mean there’s more money,” he said. “Also, the timing of the spending is a bigger impact. There’s more spending during the sales tax holiday with actually less spending before and after.”

In fact, sales are so great that some retailers compare the weekend to other holidays.

“That Saturday actually rivals the day after Thanksgiving,” said T.J. Maxx Manager Tim Alexander. “It’s a pretty good week for us.”

While some have questioned the weekend’s effect on Georgia economics, state press secretary Heather Hedrick says the drop in tax revenues is something the state prepares for.

“This is something that the legislature considered when putting together the budget,” she said.

The estimated state impact for 2005 is $10.38 million – the amount consumers would have spent on Georgia taxes on all items. The forecasted impact on local sales tax income is $6.5 million statewide. When added together, consumers save $16.88 million, money that would have gone into government coffers.

“[The weekend] benefits local retailers significantly,” Hedrick said. “It encourages consumers to get out . . . to go out that weekend and do their shopping.”

(Stephanie Schupska is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.)

Stephanie Schupska is a news editor with the University of Georgia Public Affairs Office.