Wisconsin sales tax holiday about to begin, expected to cost state nearly $15 million in lost revenue

MADISON, Wis. (AP) — Wisconsin’s five-day sales tax holiday is about to begin.

Shoppers won’t have to pay sales taxes on clothing, computers and school supplies Wednesday through Sunday.

The holiday comes with plenty of strings attached. Each item of clothing must cost less than $75 to be exempt from the sales tax; computers must be purchased for personal use and must cost $750 or less; the price of each school personal computer supply item must be $250 or less; and the price of each school supply item must be $75 or less.

Republican Gov. Scott Walker signed a bill in April that created the one-time sales tax holiday. The move is expected to cost the state nearly $15 million in lost revenue.

 

Democrats have decried the holiday as an election-year gimmick. 

A report, released in July by the Tax Foundation, says temporary tax exemptions are a “political gimmick” that cause more harm than good and fail to solve larger policy issues.

The report references studies that show tax holidays don’t significantly boost yearly retail sales. People may purchase far more goods than usual on the holiday, but they tend to wait until those dates to shop, making business slower between the tax exemptions.

People may wait to make large item purchases and increase sales during the tax exempt period, though Wisconsin’s holiday limits this significantly. But, even if consumers make impulse buys, these purchases deter them from shopping at other times and businesses must pay tax compliance costs and for extra labor during the holiday.

Back in January, Walker stopped at the La Crosse Airport, holding a Spider-Man backpack touting the sales tax holiday, along with the recently completed $100 per child tax credit — which pundits also called an election gimmick.