Tonya Garcia of Pineville has done a lot of back-to-school shopping for her three children during this weekend’s sales tax holiday.
She said she saved about $50 on things such as pencils and clothing at the Kmart in Pineville.
“It really helps the parents out, especially when you have more than one child,” Garcia said.
Garcia, like many other North Carolina shoppers, may be heading south for back-to-school purchases next year. South Carolina will continue its sales tax holiday for items such as computers, backpacks and clothing, but North Carolina’s back-to-school sales tax holiday will be coming to a close this year.
This change is part of the tax bill Gov. Pat McCrory signed July 23. Lawmakers who supported the measure have noted that the state lost an estimated $13.6 million in tax revenue during last year’s sales tax holiday.
Legislators say the tax reductions from the new law should help consumers year-round.
Amy Auth, an aide to Sen. Phil Berger, who sponsored the tax reform measure, told The (Raleigh) News & Observer before the bill passed, “This more than offsets one-time savings from things like weekend sales tax holidays.”
But North Carolina retailers, particularly near the South Carolina border, will lose out on the second-most profitable weekend of the year behind Black Friday, according to the N.C. Retail Merchants Association.
Families with school-age children will spend about $634 on back-to-school items this year, down from about $689 last year, according to the National Retail Federation. If all of those items qualified for tax-free checkout, parents would save about $43.
“We definitely believe that the business climate will suffer significantly,” said Christie Burris, a spokeswoman for the N.C. Retail Merchants Association. “The retail community always sees a significant increase in sales this weekend.”
Burris said the sales tax holiday is the only time of the year when local brick-and-mortar retailers can compete with online shopping outlets such as Overstock.com.
The sales tax holiday was launched in 2002. Burris said retailers across the state add 8,300 payroll hours during the holiday per year.
She said big-ticket items such as computers have been particularly profitable for businesses during the sales tax holiday, because shoppers are more likely to buy expensive items when they don’t have to pay 6.5-7 percent in sales taxes.
Bruce Morris of York, S.C., said he postponed the purchase of a Mac computer from a Best Buy in Pineville for almost a month. He said he saved almost $200 on his purchase.
This time next year, Morris is only shopping in South Carolina.
“I drove from South Carolina and made a purchase in North Carolina, when next year it will be the other way around,” Morris said. “South Carolina wins. North Carolina loses.”
Rob Youngblood, president of the York County Chamber of Commerce, said he expects Fort Mill, S.C., about 19 miles south of uptown Charlotte, should do “extremely well” now that its stores won’t be competing with North Carolina retailers during the sales tax holiday.
The gains for retailers don’t just come from back-to-school purchases. Burris said a 2010 study in Florida showed that people are more likely to purchase items that aren’t tax-exempt when they are saving on back-to-school purchases in the same stores.
The study showed an increase of $7 million in tax revenue to the state, based on sales of taxable items.
Burris said the retail merchants association is still fighting to keep the sales tax holiday.
It launched a Save the NC Sales Tax Holiday campaign. Burris said that if consumers respond to their legislators, the holiday could be revisited by the General Assembly in the May 2014 short session.
Staff writer Dan Burley and the (Raleigh) News & Observer contributed.
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