Getting a break on back-to-school purchases
Consumers are feeling relatively upbeat these days and retail sales are up more than 4 percent year over year, says economist Russell Price at Ameriprise Financial. But he says “back-to-school sales can fluctuate quite a bit” because of popular clothing trends among teens or hot new electronic items like tablet computers.
And this year, Price says, there are no must-have gadgets on schoolkids’ to-buy lists, so he predicts a modest back-to-school season. That’s consistent with survey results from the National Retail Federation, which estimates that the average family will spend $630 — about 5 percent less than last year — on school supplies, clothes and electronics.
At least 17 states hold sales-tax holidays for back-to-school-related purchases throughout the month of August, including Alabama, Georgia, Louisiana, Mississippi, New Mexico, Ohio, South Carolina, Texas and Virginia. They range from one or two days to more than one week in length and would save the typical family in a state with a tax rate of 7 percent about $44. Some states have tax holidays for other items, such as hurricane and emergency supplies, energy-efficient appliances and firearms.
But while tax holidays leave holes in state budgets, they don’t necessarily boost net sales for local businesses, says tax expert Kay Bell at Bankrate.com.
“I think it tends to shift shopping patterns more than increases them,” Bell says. “People just put off their shopping, they know this is coming up, they have their list, but they’re not going to go until they can save a few tax dollars.”
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