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Business & Economy

Sales Tax Holiday On The Chopping Block

A customer checks out at Southern States Nursery in Carrboro, business transaction.
Laura Candler
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North Carolina's annual sales tax holiday will end if a bill to overhaul the tax code becomes law.  A provision in the proposal eliminates the sales tax-free weekend that usually happens in early August, starting next year.

Andy Ellen is president of the North Carolina Retail Merchants Association.  He supports the plan's cuts to corporate and individual income taxes, but he argues ending the tax holiday would drive sales to neighboring states that still provide the annual break.

"Do we want people in Wilmington going to Myrtle Beach, in Charlotte going to Rock Hill, in Asheville going across the line into Tennessee, in Greensboro going up into Danville, or people sitting on their couch going online? Or do we want them in the state?" Ellen says.

Supporters of the provision say ending the holiday would provide the state with tens of millions of dollars in lost tax income.  The state revenue department says shoppers did not have to pay an estimated $14.5 million during last year's tax-free weekend.

"Quite frankly, folks who can delay their spending to single weekend in the year are likely to have a little bit more flexibility in their household budgets than a low-income or middle-income family," argues Alexandra Sirota of the North Carolina Justice Center's Budget and Tax Center.

Sirota says the state should reinvest the revenue into benefits those families depend on, like the earned income tax credit. The tax proposal lets that credit expire at the end of the year. Sirota says she opposes most of the tax proposal.

This year's tax-free weekend is scheduled for August 2-4.

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