by Sarah Curry
Director of Fiscal Policy Studies
North Carolina along with 16 other states will have a sales tax holiday this year. The holidays will cover a wide range of items and some more popular than others. Sixteen of the states will include a clothing holiday, eleven will include school supplies, seven will include computers, and six will have Energy Start products exemption holidays. Three states will offer an additional hurricane supplies and generator holiday, focused around hurricane season. North Carolina will exempt clothing, school supplies, computers, computer supplies, and sports equipment on the first weekend of August. On the first weekend of November the state will have its Energy Star appliance holiday. If you have ever seen a license plate from Louisiana, you know the state promotes being called a sportsman’s paradise; maybe one of the reasons for this state being the only one to offer a sales tax holiday on firearms, ammunition and hunting supplies.
One might argue if all these other states offer the holiday, why is North Carolina stopping? North Carolina approved tax reform legislation that will end future sales tax holidays, but will use the revenue for more broad tax relief through a cut to the personal and corporate income tax along with the elimination of the estate tax. Over time, if legislators can rework the state’s tax code for lower sales tax than neighboring states, then residents will border shop in North Carolina without the need of a sales tax holiday. Offering temporary sales tax holidays is no comparison for permanent tax relief. The fact that North Carolina has removed the sales tax holiday for 2014 and beyond is a sign that legislators realize the state’s tax system isn’t competitive. Incorporating a sales tax cut in the future will save money for consumers, and will be a tax cut that can be experienced year-round. According to the N.C. Department of Revenue, the tax-free weekend cost the state $13.6 million last year and is expected to cost around $13.4 million this year.