INDIANAPOLIS —
Indiana legislators Greg Steurwald and Kreg Battles are on opposite sides of the political aisle in the Statehouse, but they’re teaming up this summer to convince their colleagues to declare a new holiday for Hoosiers.
The Avon Republican and the Vincennes Democrat want the next session’s lawmakers to declare a "sales tax holiday" for back-to-school shoppers.
Borrowing the idea from other states that offer consumers temporary tax-free shopping on items from bookbags to computers, Steurwald and Battles say it’s time for Indiana residents to cash in.
On their side are Indiana retailers, who say issuing a temporary moratorium on Indiana’s 7 percent sales tax will have popular appeal and spur spending by shoppers inclined to pick up taxable items along with their non-taxable goods.
Opponents say the tax-free holiday comes with a cost: a loss of state revenues that pay for education and other services.
Later this summer, the legislature’s Commission on State Tax and Financing Policy will take up the issue and hear arguments on both sides. Steurwald may cite his own experience with Florida’s sales tax holiday, which he celebrated when he vacationed there with family in past years. "We would spend a ton of money to save not spending that 7 percent sales tax," Steurwald said.
"It’s great for working families," said Battles. "And it’s a good for retailers and the economy."
The idea for a sales tax holiday in Indiana isn’t new, but it’s been shot down over the past couple of years by state budget makers who were worried about declining sales-tax revenues brought on the recession. The economic downtown drained the state’s tax collections, forcing millions in state agency spending cuts and a $300 million cut to K-12 schools.
Citing similar concerns, Florida cancelled its sales tax holiday in 2009 but brought it back this year, for a weekend in mid-August when shoppers will see sales tax waived on clothing up to $75 and school supplies up to $15. Other states offer even better deals: During the first weekend in August, shoppers in Missouri and North Carolina can spend up to $3,500 on a computer without having to pay the sales tax.
Steurwald and Battles think a sales tax holiday might get a better hearing this year because state revenues are up. The state’s sales-tax collections in May totalled $522 million for the month, $28 million more than what was collected for the same period last year.
A bill backed by Steurward and Battles during the session that ended in April would have given back-to-school retail shoppers a two-day break on the sales tax for items up to $1,000. The cost to the state, in lost revenues, would have run anywhere from $17 million to $42 million, according to a fiscal impact study by the non-partisan Legislative Service Agency.
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