Tuesday, May 23rd, 2017

Sales tax holiday just a gimmick

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Waukesha Freeman Thursday, 09/08/2016 Page A06 Opinion

Sales tax holiday just a gimmick

Repeal the Unfair Sales Act instead

Gov. Scott Walker and some Republican legislators are supporting the creation of a sales tax holiday for school supplies. If all goes according to plan, the temporary exemption on sales taxes will be included in the 2017-18 state budget.

The timing of the announcement is not accidental. The bill for school supplies is still fresh in the minds of many parents. It’s also only two months until Election Day, so the happy news for consumers will be one more tally on the sheet for voting Republican.

Photo by James Wigderson

Governor Scott Walker at Kohl’s in Menomonee Falls.

The popularity of these sales tax holidays should be a caution to those Republicans who support replacing the income tax (state or federal) with the sales tax. While some economists prefer the tax on consumption rather than income, and some politicians make false promises of abolishing the IRS in the process, the unpopularity of the tax is evident in the 20 states that currently have the holiday.

As the sales tax falls on nearly every purchase, it’s highly visible and painful to the consumer. It’s no wonder that Waukesha County residents take pride in the lack of a county sales tax. We’re also resistant to every proposal to tax us to pay for Milwaukee’s desires with a regional sales tax. Unfortunately, the state’s sales tax of 5 percent still falls upon us every time we buy a box of crayons.

The so-called holiday would last for just a few days and only apply to a few items. Nonetheless, it would theoretically ease the financial burden on parents who are confronted with fees, school tuition, book costs and other expenses every September.

Unfortunately, it’s just a gimmick. Cutting a break on these items for these few days does not do anything to cut the costs of state government. Therefore, the revenue will have to be made up elsewhere. The state will have to either eliminate exemptions for items that already exist, put off cutting the income tax further, or not provide more property tax relief. It’s a momentary tax shift that actually burdens retailers with tracking the sales that meet the holiday. Every parent still pays the taxman, only the time and method changes.

A sales tax holiday doesn’t even boost retail sales. It merely shifts the timing of necessary purchases.

Meanwhile, the politicians get to pose for photos with paste-eating children because the cost of edible paste was a nickel cheaper. Everyone’s happy, even though there is no benefit of the sales tax holiday to anyone.

If Walker and state Assembly Republicans really wanted to help parents with school costs, they should repeal the state’s minimum markup law. This law, also known as the Unfair Sales Act, actually requires retailers to charge a minimum price on all sorts of items, including school supplies. It’s a leftover from the Great Depression, and it prevents retailers from selling anything below cost.

For example, the MacIver Institute found that a box of crayons cost 50 cents at the Walmart stores in Minneapolis and Chicago. Wisconsinites paid $1.24. A theme book in Chicago cost only 17 cents, but in Milwaukee it cost 42 cents.

Wisconsinites are paying more because special interests like the Petroleum Marketers Association and the Wisconsin Grocers Association don’t like the idea of the law allowing free competitive pricing. They actually prefer having the state Department of Agriculture, Trade and Consumer Protection send price police into the stores to make sure nobody got too good of a deal on a set of colored markers.

Of course, school supplies aren’t the only items affected by the state’s minimum markup law. Walmart sells many prescriptions in other states for just $4. Alcohol, tobacco and gasoline actually have a minimum markup of 9 percent.

By the way, speaking of holidays, the day after Thanksgiving isn’t nearly as special for Wisconsin consumers as it is in other states like Illinois and Minnesota.

So here’s a suggestion to all of those Republicans who will be bragging about how there will be a sales tax holiday on some items for just a few days in 2017. Spare us the silliness, and just repeal the law that prevents stores from selling items below cost like they do in other states. Let’s have a holiday for lower prices all year.

(James Wigderson is a blogger publishing at http://www.wigderson.com and a Waukesha resident. His column runs Thursdays in The Freeman.)

Every parent still pays the taxman, only the time and method changes.

JAMES

WIGDERSON

Thursday, 09/08/2016 Pag.A06 Copyright © 2016 Conley Group. All rights reserved 9/8/2016

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