Retailers prepare for sales tax holiday

When Friday arrives, Macy's in Cape Girardeau is hoping to capitalize on a statewide sales tax holiday.

The store inside West Park Mall plans to offer special tax holiday sales and add extra staff.

Though not the same financial windfall as Christmas and Thanksgiving, general manager Sharon Ebersohl expects an increase in sales receipts.

"We always look forward to special events such as tax holidays," Ebersohl said. "I suspect we'll see a boost in sales."

The statewide sales tax holiday is effective at 12:01 a.m. Friday and ends at midnight Sunday. Certain back-to-school items including clothing of $100 or less, computers less than $3,500 and school supplies less than $50 are exempt from sales tax during the three-day period.

Even if a town or county elects not to take part in the holiday weekend, consumers will not have to pay the state portion of sales tax of 4.225 percent for items that qualify for the exemption.

Statewide, 170 cities and 52 counties have opted out of the tax holiday, according to the Missouri Department of Revenue's Web site. That includes the cities of Bloomfield, Marble Hill, Kennett, Poplar Bluff and Ste. Genevieve, and the counties of Bollinger and Ste. Genevieve in Southeast Missouri.

Missouri passed the sales tax holiday in 2004.

Cape Girardeau has opted in despite the loss in revenue to the city. Officials estimated the city lost about $138,000 in sales tax revenue during the first three years combined because of the holiday. City finance director John Richbourg said he was unable to determine the loss in revenue for 2007.

Bollinger County Presiding Commissioner Wayne Johnson said his jurisdiction depends on income generated from a 1.5 percent sales tax to meet its annual budget. By participating in the holiday, Johnson said the county would miss out on valuable tax receipts.

"Personally I dislike taxes, but it's important we maintain certain types of taxes to maintain our annual budget," he said.

Johnson said he was unsure how much money consumers in Bollinger County would save even if the jurisdiction elected to participate in the tax holiday.

"Most people travel to other counties to do business and shop in places like Cape Girardeau County," he said. "This tax holiday probably will benefit those who are spending a lot of money."

He said if consumers purchase more expensive items like computers, the tax holiday could pay off. But he thinks most people will buy clothing or school supplies and will save "a few bucks."

Meanwhile, Bruce Domazlicky, economics professor and director of the Center for Economic and Business Research at Southeast Missouri State University, said income generated from the tax holiday will be short-lived.

"My impression is the tax holiday will shift spending," Domazlicky said. "People buying back-to-school items may have waited until August.

"We might get an outside bump from those who come in from out of state and spend money here," he added. "It may increase sales for the weekend but won't impact the economy in the long run."

But local merchants and the Missouri Chamber of Commerce and Industry insist Missouri's economy will benefit from increased spending generated by the tax holiday.

"This is a much-deserved tax break for Missouri's working families, especially in the current economic climate," said Tracy Weddle, Missouri chamber director of tax and financial affairs. She added that the organization expects "shoppers from neighboring states that don't have a tax holiday such as Illinois, Arkansas and Kansas."

Cape Girardeau Area Chamber of Commerce president and chief executive officer John Mehner said the city's proximity to Illinois will give it an added advantage once the sales tax holiday begins.

"All of our retailers are pretty excited each year to have the opportunity to increase their revenue," Mehner said. "Since we began, the feedback I've gotten is that businesses see increased revenue, which in turn boosts their receipts. And that's great news for our local economy."

bblackwell@semissourian.com

335-6611, extension 137

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