Although the North Carolina General Assembly is currently not in session, legislators are keeping a close eye on the 2011 State Budget. An even keener eye is focused on 2012 as North Carolina's lawmakers look to streamline state government and the State Budget; between now and May 2012 (when the legislative Short Session is scheduled to begin) every line item in the State Budget is being closely evaluated.
Media stories have surfaced in recent weeks detailing how the North Carolina General Assembly is considering a repeal of the North Carolina Sales Tax Holiday weekend. The Associated Press quoted the Department of Revenue's estimates that North Carolina lost $14.5 million in sales tax during the 2011 Sales Tax Holiday. This discussion could gain traction as legislators begin to re-evaluate the State Budget and look for areas to streamline tax policy. NCRMA is developing a short-term and a long-range legislative strategy to maintain the Sales Tax Holiday in future years.
WRAL ran a story on August 2, 2011, noting that the General Assembly is exploring the possibility of postponing and evaluating North Carolina 's Sales Tax Holiday, and then re-ran the story on August 12:
WRAL August 2: http://www.wral.com/news/state/nccapitol/story/9944469/
WRAL August 12: http://www.wral.com/news/state/nccapitol/story/9986530/
The story notes the "cost" to the state of North Carolina (i.e. $14.5 million in lost sales tax). However, NCRMA lobbyists have already reached out to remind legislators of the reason North Carolina first enacted a Sales Tax Holiday: legislators and retailers alike watched North Carolina citizens cross into surrounding states and return with shopping bags full of both items exempt and non-exempt from sales tax during the sales tax holiday. Legislators realized that these shoppers were buying gas, eating meals and staying the night somewhere other than North Carolina in order to reap the benefits of a sales tax exemption.
Below is a link to a study of the economic impact of Florida's Sales Tax Holiday that NCRMA has provided to General Assembly members. The study found that rather than costing states money, the sales tax holiday actually increases state revenues through sales tax on ancillary purchases - trips to the food court, increased hotel room stays, as well as increased jobs and payroll taxes that come from these jobs.
Florida STH Study: http://www.frf.org/files/weg_2011.pdf
NCRMA is staying in close touch with legislative leadership as this discussion unfolds to educate legislators on the popularity of the Sales Tax Holiday with their constituents - providing a small tax break to consumers as they make necessary purchases for children returning to school and/or college.
