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Sales Tax Holidays Popular, But Not Effective

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Brandon Hollingsworth, WUOT News
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  This weekend, Tennessee held its annual sales tax holiday. School-related items, including electronics and clothing, will be free of state sales taxes. Sixteen other states hold similar "tax holidays," on items ranging from hurricane preparedness supplies (Alabama) to firearms (Louisiana). But while the holiday weekends are politically popular, their economic benefits appear to be slim.

The tax holiday weekend doesn't deliver big sales like the holiday shopping season, so consumers aren't saving much money. Retailers may see a temporary bump, but likely not enough to significantly effect year-long sales figures. And state government will lose a little money, since the suspended taxes funnel into state revenues.

Dr. Bill Fox, director of the Boyd Center for Business and Economic Research in Knoxville, spoke with WUOT All Things Considered host Brandon Hollingsworth about Tennessee's sales tax holiday and its effects on shoppers, state government and retailers.