Sales tax holiday prompts opt-out

As summer winds down and students gear up to head back to class, Missourians will be looking to save money wherever they can on items ranging from pencils to laptop computers.

Some Missourians will have the chance to save during the third annual state sales tax holiday Aug. 4 through 6. Others, including Columbia residents, will have to settle for more modest tax discounts.

During the holiday, the state sales tax of 4.225 percent will not be charged to consumers buying up to $100 in clothing, $350 in computer software, $50 in school supplies and $3,500 worth of computer equipment.

Boone County officials, joining those in at least 52 other Missouri counties, opted out of the sales tax holiday for the third consecutive year. The Columbia City Council did the same. That means regular city and county sales taxes will apply to purchases that weekend. Sales in Columbia will be taxed at 3.125 percent, down from the 7.35 percent that normally is charged.

The opt-out ordinance adopted by the City Council says that the sales tax holiday would “significantly reduce local revenue” and that the city depends too heavily on sales tax for essential services to take part in the holiday.

Boone County Auditor June Pitchford said the holiday was not necessarily in the best interest of all cities in Missouri. She said local voters have approved taxes to pay for services. While state officials might decide Missouri can go a couple of days without sales tax revenue, they should not try to make the same decision for cities and counties, she said.

Pitchford also said the state tax holiday law is clumsy because it puts the burden of opting out of the program on the shoulders of local officials.

“Local governments felt they should be able to opt into the holiday as opposed to being required to opt out,” she said.

All the counties surrounding Boone have opted out of the holiday. In Randolph County, Presiding Commissioner Jim Myles said a “precarious financial situation” prompted officials to opt out.

“We couldn’t run the risk of losing taxes,” he said.

Columbia City Finance Director Lori Fleming said opting out makes financial sense for Columbia, too.

“Sales tax is the most important source of general revenue for city operations,” she said. While estimating how much the city could lose by participating is difficult, Fleming said that last August, Columbia made about $54,000 a day from sales tax.

What the holiday accomplishes is unclear to Pitchford. While it might draw shoppers from other states to border counties, there is no benefit like that in the middle of the state, she said. She also doesn’t think it will prompt shoppers to spend more.

“People won’t increase spending, they’ll schedule spending for a day during the sales tax holiday,” she said.

That’s what seems to be happening at the TigerTech computer store at MU.

“We make customers aware that this is coming up and that they can save quite a bit of money,” employee Kellen Rotert said. TigerTech is taking orders for computers and holding them so it can finish the transactions during the holiday.

“We have lots of computers put together, just waiting to be charged to credit cards on that weekend,” Rotert said.