Tennesseans shopping for school supplies and clothes for the upcoming school year should take advantage of the sales-tax holiday, which will continue through today and Sunday.
If you want to maximize your savings, though, don’t be trapped by the allure of a tax holiday alone. Anyone planning to shop this weekend should study the rules so they know what’s tax exempt and what is not, like pricey electronics, and to avoid confusion at checkout. More importantly, shoppers must be disciplined.
Fifteen other states, including neighboring Virginia, will hold tax holidays for school supplies this year.
And no, you don’t have to be in school, or have a child in school, to take advantage of the savings.
With consumer confidence rising and more young people in school, back-to-college spending is expected to hit an all-time high this year while back-to-school spending is expected to see its second-highest spending level on record, according to the National Retail Federation’s annual survey conducted by Prosper Insights & Analytics. Total combined spending is expected to reach $83.6 billion, an increase of more than 10 percent over last year’s $75.8 billion.
Back-to-school season is the second biggest shopping season of the year touching 29 million households. This year’s survey by Deloitte reveals a category shift among the items respondents intend to buy for their children. Clothing and accessories are expected to account for 55 percent of families’ spending — up 10 percentage points from last year. Meanwhile, computers and hardware will take up just 14 percent of the spending; this is four percent lower than last year.
Though it may appear to be a bargain for shoppers, don’t expect to realize huge savings or for this to serve as an economic catalyst.
If all of that spending occurs this weekend, Tennessee’s tax holiday could save them about $41 (or more, depending on the county they shop in).
It is questionable how much sales tax holidays really help retailers and consumers. While retail sales increase in the month of a tax holiday, that increase is traditionally offset by losses in sales in other months, like August and September, when that money is traditionally spent.
Other think tanks question how much even consumers — especially low- and moderate-income families — realize in savings.
For example, a recent report by the Institute on Taxation and Economic Policy says in the long run tax holidays have a minimal impact on families and regressive sales taxes are left intact.
As ITEP also notes, these holidays offer no advantage for poor and working class families over wealthy ones, who not only benefit from the tax holiday but have more flexibility to schedule their spending around it. And ITEP and other economists warn that some retailers won’t cut prices as low as they would otherwise during back-to-school sales, so consumers won’t see much of any benefit.
That’s why families in real need of relief must stick to basic principles of smart shopping: Determine your budget, make a list of the essential items, compare prices and don’t overspend.
And, don’t forget to shop local. When we support our local retailers, we’re helping to boost Carter County and Elizabethton’s economy.