Sales tax holidays are gimmicks used by the government for political gain and to distract from real tax reform, according to the Tax Foundation.
A total of 17 states have held or will be holding sale tax holidays in 2012, which is 2 states fewer than the peak of 19 in 2010.
During a ‘sales tax holiday,’ certain goods, often school supplies, are exempted from sales taxes at the state level.
“Despite their political popularity, sales tax holidays are based on poor tax policy and distract policymakers and taxpayers from real, permanent, and economically beneficial tax reform,” said the report written by the Tax Foundation’s Joseph Henchman.
“Sales tax holidays introduce unjustifiable government distortions into the economy without providing any significant boost to the economy. They represent a real cost for businesses without providing substantial benefits.”
The report also called them an “inefficient means of helping low-income consumers and an ineffective means of providing savings to consumers.”
Read more.