Senate passes tax holiday legislation

JEFFERSON CITY, Mo. -- Attention, back-to-school shoppers: For three days only this August, you could get a tax-free bargain on everything from clothes to computers to pencils.

Legislation passed Thursday by the Missouri Senate would lift most state and local sales taxes on the purchase of traditional school items during the second weekend in August.

The Senate's 26-5 vote sent the bill to the House.

Supporters say the so-called "sales-tax holiday" could spur the economy -- giving a break to Missourians and encouraging residents from neighboring states to do their shopping in border cities such as St. Louis and Kansas City.

The tax holiday would run Aug. 8-10 this year. It would expire after the August 2004 back-to-school shopping season.

"We are going to have a lot of pain this year in the budget, and this is something nice we can do for Missourians that has worked well in the nine other states that have done it," said Senate President Pro Tem Peter Kinder, R-Cape Girardeau, the bill's sponsor.

Missouri government is projected to take a $5 million tax loss by the shopping promotion.

But that would be offset by another provision in the bill to raise $7 million annually by taxing the Missouri lottery and casino winnings of out-of-state residents.

The sales tax exemptions would apply to articles of clothing costing no more than $100 each; school supplies costing no more than $50 per purchase; and personal computers costing no more than $2,000.

Accessories such as watches and jewelry still would be taxed, as would such things as radios, CD players and sports equipment.

Local governments could opt out of the sales-tax holiday by approving a local ordinance. The bill would create a state legislative committee to study the impact of the sales-tax holiday.