Last back-to-school tax holiday starts today

Aug. 02, 2013 @ 07:10 AM

This weekend, you can shop for back-to-school supplies from clothes to a new laptop without having to pay any taxes – but, barring a change in the law, it’ll be the last time that happens in North Carolina.

The state’s annual sales tax weekend gives shoppers a chance, just before the start of the school year, to purchase clothing, school supplies and select electronics without paying state or local sales taxes. In Caldwell County, shoppers normally pay an additional 2 percent in local sales taxes along with 4.75 percent in state taxes.

But the three-day tax break – which started this morning and continues through Sunday – costs the state millions of dollars in revenue each year, about $13.6 million in 2012, according to the Department of Revenue. So it was eliminated, along with 47 other tax breaks and loopholes, as part of the tax bill recently signed by Gov. Pat McCrory. The same legislation cut personal and corporate income tax rates.

Managers at the Walmarts in Granite Falls and Lenoir, and the Staples in Lenoir said the tax-free weekend typically produces a huge boom in store traffic.

At Staples, business essentially doubles over the weekend, general manager Anna Hudson said. Hudson said she isn’t necessarily concerned about losing business on school supplies next year, but she thinks she may see people buying fewer electronics. Those last longer, she said – but school supplies have to be purchased whether there’s a tax break or not.

Several commenters responded to a News-Topic Facebook post about the tax-free weekend, some saying they would find it harder to purchase school supplies without it.

“It doesn’t surprise me if this happens,” Tracy Holmes Barr wrote. “It seems like only the rich people get breaks. We have two kids. Our son will be in the sixth grade and our daughter will be in the fourth. Every little bit of savings helps.”

Other commenters said the change would be hard on teachers, who often use tax-free weekend to purchase supplies for their classrooms.

“It will affect teachers as well as parents because we buy supplies out of our pocket then too,” Gail Ramsdell wrote. “Makes me mad that all of the wealthy people get tax breaks, but not the working class, which is who this tax break helps the most.”

Officials with the Caldwell County Schools said the end of tax-free weekend could have a strong impact because of the number of families whose children qualify for free and reduced lunch.

"The tax-free weekend has been an excellent, equitable show of support for parents and students across the state," superintendent Steve Stone said. "It served a great purpose for families in our area, especially those who have already experienced unemployment and financial hardship."

Several Facebook commenters said they’d cross the border to other states to take part in their sales tax holidays next year. For most Caldwell County residents, South Carolina – which also holds its tax-free weekend on the first weekend in August – is less than two hours away by car.

But sentiment was not unanimous. Others said the end of tax-free weekend is a good thing, or that it wouldn’t affect them much.

“I buy school supplies all during the year, so the tax-free weekend isn’t a big deal for us,” Christa Greene McLeod wrote. “[There are] other ways to save.”

Brady Soop said he supported the change.

“I’ll take a reduced tax rate for the entire year over one weekend tax-free on limited items,” Soop wrote.

The legislators representing Caldwell County said they think the reduction in income tax rates will make up for the loss of the sales tax holiday.

“The reason for the end of the sales tax holiday starting next year is part of our comprehensive tax reform plan that has as its goal to make state taxes simpler, fairer and lower,” said state Sen. Dan Soucek, R-Watauga.

Rep. Edgar Starnes, R-Caldwell, said taxpayers would save as much through income-tax reductions as they would through the tax-free weekend.

“You’ve got to look at the big picture,” Starnes said. “It just sort of depends on how much a person would spend on back-to-school supplies, but for the average family, they were able to save a few dollars on shopping on a tax-free weekend and hopefully they’ll be able to save the same through the reduction in income tax.”

Becki Gray, vice president for outreach for the conservative John Locke Foundation, wrote this week that most taxpayers will see a tax cut under the new plan, while a few – some married couples with three or more children and those whose annual income comes mostly from self-employment or pensions – may see a small increase.

Alexandra Sirota, director of the left-leaning North Carolina Budget and Tax Center, has said that those earning less than $84,000 will pay more in taxes on average because of the other tax changes, including the end of the tax-free weekend, in the plan adopted by the legislature.

Anna Hudson, the Staples manager, said she’s most interested to see whether people know the tax-free goods they’re buying this weekend will be their last.

“People have been checking out today and asking, ‘Is it really the last tax-free weekend?’” she said. “So it’ll be interesting to see how many people really know it’s the last one.”