On Politics
By Richard Borreca
Sunday, August 12, 2001
New boxes of crayons, new gym clothes and new backpacks are all being snatched from store shelves across the state as parents prep their children for school. State late to declare
holiday on sales taxFor Hawaii's beleaguered consumers, the excitement of school's first days is tempered with the debts mounting on credit cards financing those back to school shopping sprees.
Meanwhile, across the nation, other state legislatures have devised a wildly popular way to help: A sales tax holidays timed for back to school shoppers.
Retailers link the tax holiday with special sales. Some shopping centers do midnight madness sales, opening at the first legal minute to start selling without state and county taxes.
Usually things like jewelry and accessories are not included on the tax-exempt list.
About eight states give some sort of special sales tax holiday to help parents with school shopping. The tax exemption is for school supplies, computers or clothes and shoes. The exemption also is for a specific amount, say between $100 and $300, so that shoppers don't stock up for the entire year.
So far Pennsylvania, South Carolina, Connecticut, Florida, Iowa, Maryland and Texas have some sort of tax holiday, and 10 other states are thinking about it.
In Texas, state officials are expecting consumers will save $31.2 million in state taxes and $8.4 million in local taxes.
"It's a great idea,' says Rep. Barbara Marumoto (R, Kahala), who has tried twice to get the same tax break for Hawaii consumers.
Marumoto first suggested the tax holiday five years ago. The legislature responded with a resounding "Huh?" and the issue seemed to die. She couldn't even get the Democrats to pass a resolution calling for a study.
But then this year Rep. Lei Ahu Isa took over as chairwoman of the Economic Development Committee, and Marumoto's idea was dusted off.
A similar one was also introduced by Democratic Rep. Terry Yoshinaga, but Ahu Isa notes that Marumoto was first to push the tax holiday.
"I think it is wonderful, I think it is great and it passed in my committee," Ahu Isa said.
But the bill died in the House Finance Committee and was opposed by the state tax office.
The idea may have more power than the Finance Committee. Retail Merchants Association director Carol Pregill says they supported the retail tax holiday last year and are considering whether to make it a priority issue for the next legislative session.
Knowing the ways of state government, however, Pregill worries that if the state does grant a tax holiday, the pencil-pushers will manage to drown the storekeepers in paperwork and forms so that no one will want to support the program.
By ways of example, other states have worried about the same thing, but acted in favor of consumers by helping the merchants. In Florida, for example, the state sets up a toll-free hot line to any questions business owners may have and every business is mailed specific instructions on the tax holiday.
Florida officials estimate that shoppers saved $28.5 million in Florida last year.
Interestingly, there don't appear to be negative results for retailers or the states. The increased shopping volume appears to balance out against the taxes lost on the exempt items.
There's another reason why the school shopping tax holiday is such a popular idea, according to Pregill.
"There is just this perception that you are putting one over on the government; it makes it extremely popular.
"Besides it boosts overall sales, and all our members support it," she said.
Too bad Hawaii didn't act sooner -- this year across the Mainland merchants are linking the tax holiday sale with the federal tax rebate and are expecting huge crowds.
It will be Christmas in August, one Texas retailer said. Here in Hawaii, it will just be August.
Richard Borreca writes on politics every Sunday in the Star-Bulletin.
He can be reached at 525-8630 or by e-mail at rborreca@starbulletin.com
