Back-to-school sales tax holiday returns, this time for 2 weeks and just as many questions

The popular sales tax holidays are back.

With summer ending just as quickly as it began, Florida’s annual back-to-school sales tax holiday is back again. And for the first time ever, the savings opportunity will run for 14 days rather than the usual weekend.

But is it really an annual holiday? And is it really a savings opportunity?

The back-to-school sales tax holiday has been a usual sight ahead of the academic year that begins each August. This year, the holiday runs from Monday until Aug. 7, two Sundays later.

Over those two weeks, the state expects to waive more than $100 million in revenue, including $22.8 million in local sales taxes as Floridians spend on the host of academic supplies, like clothing, backpacks, pens, paper and even computers.

This year will be the 21st time Florida has held a back-to-school sales tax holiday since the practice reached the Sunshine State in 1998. However, some are advocating for it to end despite the sales tax holidays’ apparent political popularity.

Sales taxes make up the bulk of taxes paid by individual Floridians, driving the state to have one of the most regressive tax structures in the country. That means low-income households end up paying more taxes relative to high income households.

“The conversation about tax relief is important,” said Esteban Leonardo Santis, policy analyst and the Florida Policy Institute, a progressive organization. “Unfortunately, the back-to-school sales tax holiday doesn’t do it.”

Sales tax holidays don’t address structural problems with the tax system, he continued.

Additionally, back-to-school sales taxes have combined for less than a year of sales tax relief instead of year-long relief. Plus, evidence suggests only a fraction of Floridians take advantage of the holiday.

One study by the State Innovation Exchange, another liberal organization, has shown only a fifth of Floridians “usually or always” shop during sales tax holidays, although a majority say they at least sometimes take advantage of the events. Furthermore, 60% of voters, including a majority of Republicans, supported lawmakers skipping sales tax holidays for 2021, per a survey commissioned by Florida Policy Institute and others.

Instead, lawmakers expanded the terms of sales tax holidays that year, extended the back-to-school sales tax holiday to 10 days and introduced Freedom Week, a tax holiday on outdoor activities and concerts. And this year, lawmakers created a seven-day “Tool Time” tax holiday on supplies for handymen and skilled trades.

Santis recommends policies like an earned income tax credit, which helps low- to moderate-income workers receive tax breaks.

“If we implemented some local-level earned income tax credit and we put money towards that, then that’s a way that we could target those families,” Santis said. “It’s more targeted than the blanket sales tax holiday exemption, which, again, not a lot of people actually use even though they’re aware of it and it’s open to everyone.”

Sales tax holidays also provide little retail boost, according to the Tax Foundation, a fiscally conservative organization. People instead shift the timing of planned purchases to fall within the exemption period, making it more of a “political gimmick” than effective relief.

However, Dominic Calabro, President and CEO of the nonprofit budget watchdog organization, Florida TaxWatch, touts the tax holiday as an effective tool for parents.

“The annual Back-to-School sales tax holiday is a longstanding and effective form of financial relief for Floridians, always highly anticipated as their families begin to prepare for each new school year,” Calabro said in a statement.

“In 2022, a year already defined by record and rampant inflation, Florida TaxWatch can certainly appreciate the savings this sales tax holiday will once again generate, but we are also hopeful that parents will view it as an opportunity to help their children — students of all ages — get excited about all they will learn and achieve in school, as we understand the positive impact a quality education can have on both personal success and the success of our communities and the state overall.”

Additionally, back-to-school sales tax holidays are popular with lawmakers on both sides of the aisle. Ahead of this year’s Legislative Session, Democratic Sen. Jason Pizzo suggested splitting the back-to-school holiday between the summer and holiday breaks, providing families a second chance to restock on supplies that likely won’t make it through the school year. His suggestion gained no traction with the Republican majority.

The holiday isn’t a recurring holiday, and its length and what items are eligible is ever-changing. When lawmakers meet each year, they determine whether to offer the holiday and the terms of the tax breaks.

The holiday began as a one-week holiday and grew to a 10-day holiday in 2007, skipping 2002 and 2003. Since the holiday resumed in 2010 following the 2008 Recession, the event has largely been constrained to a three-day weekend. Boosted by the state’s record level of reserves, lawmakers decided to extend the holiday to a two-week holiday in an effort to help relieve inflation.

The list of tax-exempt items — and their acceptable price tags — has varied over the years but has always included clothing and shoes. Lawmakers added wallets and bags to the mix in 1999, and school supplies weren’t added until 2001. Books were tax exempt from 2004 to 2010, and computers became a staple of the holiday in 2013, except when they were skipped in 2016 and 2018.