How does a three-day break from sales tax on back-to-school clothing and school supplies benefit households? In 2012, the National Retail Federation estimated that the average family with children in school spent nearly $700 on back-to-school supplies and clothing. As the Ohio legislature contemplated a permanent sales tax holiday on goods sold just prior to the start of the academic year, our Center measured the implication and economic benefits of the Ohio sales tax holiday.
Our econometric analysis indicated the tax holiday contributed to approximately $34 million in exempted sales tax activity throughout the state during August. This sales activity was not distinguishable from historical variations in retail sales. However, household savings of approximately $2.4 million, or $50 per household, are attributable to the uncaptured sales tax revenue. The Ohio Retail Merchants Association commissioned this work. We utilized an econometric forecasting model to estimate the percentage change in retail sales during the sales tax holiday weekend.
To access the findings, go here.