Newspaper article THE JOURNAL RECORD

Recess for Retail Tax: Shoppers Save on Tax Holiday, but at What Cost?

Newspaper article THE JOURNAL RECORD

Recess for Retail Tax: Shoppers Save on Tax Holiday, but at What Cost?

Article excerpt

OKLAHOMA CITY - For many students, it's approximately one month until the 2014-2015 school year begins.

At the Fashion Sport and Uniforms store on NW 23rd Street, the back-to-school rush will start sooner than mid-August. Manager Santi Kos is already anticipating the crowd he'll see Aug. 1-3 when the state has its annual sales tax holiday. Kos said he expects to see two to four times the amount of customers that weekend, compared to a pre-new-school-year weekend.

Starting 12:01 a.m. Friday, Aug. 1, and ending midnight Sunday, Aug. 3, clothes and shoes less than $100 are sales-tax exempt. The exemption went into effect August 2007.

"It's good for the customer, because they get to save money," Kos said.

While customers keep a little cash, the state isn't collecting an average of $4 million per year in sales tax.

However, cities and counties don't miss out on the sales tax because of a provision in the holiday's state law. Each year, 511 cities and 77 counties divide an amount the Oklahoma Tax Commission figures is the tax the entities would have collected, and then the cities and counties are reimbursed that amount. The city and county totals are calculated using a formula that includes the previous year's sales. In 2013, the cities divided $2.7 million, and the counties divided $519,883. Oklahoma City received $723,998, Tulsa was reimbursed $401,409 and Lawton received $79,266.

Oklahoma City Budget Director Doug Bowler said that while the city is pleased to get what it does from the state, there is worry that the entity could have received more if the tax was collected.

"The only concern is that we don't know how much it should be," he said. "We're very grateful that (the legislators) involved municipalities and didn't sell us short on our sales."

That unknown amount concerns Mickey Hepner, dean of the college of business at the University of Central Oklahoma, and a former economics professor.

"(The sales tax holiday) does come with a revenue loss," he said. "By shifting that consumption to when it's no longer taxed, states and cities do lose on that revenue. In Oklahoma, it's even worse because we overly rely on our sales taxes to fund our municipal governments. …

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