A state lawmaker from Houston who was instrumental in getting tax-free holiday legislation passed eight years ago says it’s time to tinker with the law again. As Houston Public Radio’s Jack Williams reports, state Senator Rodney Ellis wants to expand what can be purchased and also how much consumers can spend tax-free.
Ellis says he’ll propose a new law that would expand the list of items that are tax-free for a weekend to include traditional school supplies, like pencils, paper and binders. He also wants to increase the minimum amount consumers can spend on one item tax-free from $100 to $150.
“If those items were included and the cap went from $100 to $150 to allow for more items to be tax-exempt, it would create a small increase that will save an estimated $6.5 million out of taxpayers pockets during the traditional sales-tax holiday in Texas.”
“It has saved the taxpayers in Texas $336 million when you don’t include this past weekend because they’re still generating the numbers. But now it’s time to tinker with it. It’s time to look at what other states are doing and it’s a matter of fairness. We ought to do something so that our poorer, more vulnerable citizens don’t carry a disproportionate share of the burden to finance state government in Texas.”
But critics of the plan to expand the tax-free holiday say the state can’t afford to be giving away any more revenue. Dick Lavine is the senior fiscal analyst at the Center for Public Policy Priorities in Austin. He says the once-a year tax holiday means less money for other state programs.
“We calculated that the state is giving up four times more revenue than it spends on aid to local public libraries statewide. It’s giving-up twice as much revenue as the state spends on adult protective services to prevent elder abuse. So you have to remember, you’re getting away with something but you’re also giving up something.”
Lavine says he thinks consumers are fooled into thinking the tax-free holiday is a bigger deal than it actually is.
“They have to think to themselves, am I just running out for a sale that’s going to save me 8.25% when on any other weekend I wouldn’t even leave my house for less than a 20-30% off sale and am I getting suckered into something that really has a hidden cost of lost services that I really should be thinking about.”
Senator Ellis’ plan has the support of State Comptroller Susan Combs and the Texas Retailers Association. He plans to file the bill during the next legislative session.