DENVER—A back-to-school sales tax break on school supplies and low-cost clothes is closer to approval in Colorado, despite criticisms from the right and the left that that a so-called “sales tax holiday” may do little to help needy children or the economy.
A Senate committee approved the tax break 4-3 on Thursday. The measure faces another committee test, but its chances are excellent in the Senate. Senate President Brandon Shaffer is one of the sponsors.
“It’s an idea whose time has come,” Shaffer said.
Back-to-school tax breaks are enormously popular with voters, and Shaffer is running for Congress this year against a Republican incumbent. One of the House sponsors, Rep. Joe Miklosi, is another Democrat running for Congress.
The measure would waive the state’s 2.9 percent sales tax on certain school supplies and low-cost clothes and computers. If approved, the sales tax holiday would be the first weekend in August. It likely wouldn’t take effect until 2014 because it’s triggered by a rise in personal income taxes.
The sales tax holiday has already passed the House and has the backing of retailers. But some critics from both parties dismiss the idea as a political gimmick that would do little to help needy parents or the economy.
Democratic Sen. Michael Johnston, chairman of the committee that approved the sales tax holiday by a single vote, asked whether the small sales tax waiver really helps the needy.
“A $50 backpack doesn’t suddenly become affordable at $49,” argued Johnston, who later voted for the measure despite his misgivings.
A lobbyist for the Colorado Retail Council, which backs the bill, conceded that the help to needy parents isn’t great. Charlie Sheffield said the state sales tax “is not a lot out of the cost, but it’s the most that you as state lawmakers can provide.”
Economists differ on whether back-to-school tax breaks help consumers or just shift spending that was going to happen anyway. A fiscal projection prepared for lawmakers estimated that Colorado would lose some $4.5 million in sales taxes, though supporters argue Colorado would pick up the difference through additional shopping.
“The only thing we know for sure is, nobody knows for sure,” Shaffer said.
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