It’s always a holiday in New Hampshire

By Grant Bosse on July 26, 2011
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(CONCORD) State efforts to boost retail sales by temporarily suspending state sales taxes don’t work, according to an updated study from the Tax Foundation. 19 states held Sales Tax Holidays in 2010, and 16 plan to do so this year, waiving state taxes on some or all products for a period of two days up to over a week. Six states plan multiple sales tax holidays in 2011. The recently published report finds no evidence that sales tax holidays boost actual sales.

Sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of purchases. Some retailers raise prices during the holiday, reducing consumer savings.

The study’s authors, Mark Robyn, Micah Cohen, and Joseph Henchman, conclude that sales tax holidays are a political gimmick that distract policymakers from real tax reform, and that having to suspend the sales tax to attract customers is a sign of an uncompetitive retail climate.

Massachusetts has held six sales tax holidays in the last seven years, and the Boston Globe reports lawmakers are considering another one for August. New Hampshire is one of only five states without a broad-based sales tax.

Read the full report on Sales Tax Holidays.

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