[ OUR OPINION ]
NUMEROUS states have declared "holidays" from sales taxes for brief periods to create shopping sprees that provide savings to consumers and boost retail sales for businesses. Their success has led to repeat performances that are models for a bill introduced in the Hawaii Legislature. It would be worth the tryout. Tax holiday would be
a shot in the arm
THE ISSUE A state representative is proposing a brief holiday from Hawaii's general excise tax.
Rep. Barbara Marumoto's bill would grant shoppers a week-long reprieve from the state's general excise tax on goods costing less than $100. Other states have adopted similar "tax holidays" ranging from two to 10 days and from $100 to $500 in tax-free spending ceilings.
New York initiated its three-day tax-free holiday in 1997 and continues to hold it every August. Other once-a-year tax-free periods are scheduled the same month to accommodate back-to-school shopping in West Virginia, Texas, Connecticut, Iowa, North and South Carolina, Florida and the District of Columbia.
Georgia has two-day tax holidays in March and August for clothing costing as much as $100, with the second date also exempting taxes on home computers costing as much as $1,500. While Pennsylvania has a week-long tax holiday in February strictly for computer purchases, most of the laws specify tax exemptions for purchases of clothing, footwear and school supplies.
"It puts money into consumers' pockets and provides help to our retailers," explains Dana Harvey of the Retail Merchants of Hawaii. A Connecticut state representative says his state's week-long tax holiday debut in 2001 resulted in $3 million in consumer savings, and that state now makes it an annual event.
"The week is good for taxpayers who save money, it is good for retailers who benefit from increased sales and it is a good boost for the state's economy overall," says Connecticut Tax Commissioner Gene Gavin.
Governor Lingle is skeptical, calling the proposal "a short-term idea that will not do anything to make our tax structure fairer or easier to administer." But it is not intended as an alternative to the governor's more grandiose tax reforms, only as a brief shot in the arm for both consumers and retailers.
Kurt Kawafuchi, Lingle's deputy tax director, cites one study showing that merchants have responded to the tax holiday by raising prices. That may be an isolated occurrence indicating a lack of aloha, but the above-mentioned states would not be authorizing encores of the tax holidays if such abuses were widespread.
Hawaii's House Committee on Economic Development and Business Concerns pared Marumoto's proposal to a three-day tax holiday and sent it to the Finance Committee for further action.
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