In one of those mostly under-the-radar moves that often happen in the late stages of Ohio’s high-stakes budget process, Statehouse Republicans expanded the state’s annual August weekend sales tax holiday on school supplies — which typically costs the state $20 million in revenue annually — to a far bigger tax holiday starting next year.
It will apply to almost everything people buy costing less than $500. And it’s intended to last until the lost tax revenue hits $750 million or thereabouts. Yes. You read that right. Up to three-quarters of a billion dollars with almost no limitations on what people can buy and still get the tax break — other than no motor vehicles, watercraft, outboard motors, alcohol, tobacco and vaping products or medical marijuana, cleveland.com’s Jeremy Pelzer reports.
The new expanded tax holiday is slated to start Aug. 1, 2024. This year’s tax holiday will run as usual only on the first weekend of August, with no sales tax charged on school supplies costing less than $20 or clothing less than $75.
As written into the budget by lawmakers, the expanded sales-tax holiday was supposed to last two weeks starting next year, but Gov. Mike DeWine vetoed that language on the grounds that the $750 million limit might be breached before the two weeks were up. He directed instead that the state tax commissioner and budget director work with the County Commissioners Association to decide how long the sales tax holiday should last next year.
Lawmakers see it as a way to stimulate the economy, although economists are divided on the worth of such an approach, Pelzer reports, while critics argue the money could be better spent — for instance, largely geared to low-income families.
So is this a gimmick or generous give-back?
Leila Atassi, manager public interest and advocacy:
Tax breaks should be deployed in service to those who need them. Wealthier consumers are positioned well to benefit from sales tax holidays because they have the financial flexibility to time their purchases to coincide with the tax break. Families living paycheck to paycheck don’t have that luxury. The state should consider tax reforms that more directly benefit lower-income Ohioans.
Thomas Suddes, editorial writer:
This is a publicity stunt to get a “tax holiday” headline for the legislature. There are far better uses for $750 million, starting with bolstered child care programs and supplemental aid for special-needs Ohioans. And the next time someone says Ohio can’t afford to fully fund public schools, keep this “tax holiday” gimmick in mind.
Ted Diadiun, columnist:
I hate taxes, so I’m struggling to celebrate this proposal. But I just can’t get there. The school supplies tax holiday is a nice idea, assuming it helps people buy school supplies who normally wouldn’t. But expanding it to other purchases strikes me as just a grandstand play that’ll do nothing but cost the state three-quarters of a billion dollars.
Eric Foster, columnist:
Politically, it’s hard to argue against a tax holiday. The idea of no taxes is appealing to everyone. People might view them differently if they were asked what they thought was the best use of $750 million. Increasing teacher pay? Universal pre-K? Infrastructure? When the state says we don’t have money for these things, remember … you got a tax holiday.
Lisa Garvin, editorial board member:
The sales tax holiday extension seems like a “let them eat cake” moment. Long after the temporary savings have faded, a $750 million revenue shortfall remains. In their current tax-cutting mode, Republican lawmakers will balance the budget by decreasing funding to critical programs that would benefit Ohio families far more than a few extra days of tax-free shopping.
Mary Cay Doherty, editorial board member:
Tax holidays, like vacations, aren’t necessary but provide respite from life’s economic demands. And longer “vacations” are more restorative than weekend getaways. According to the website Statista, state taxes generated $37 billion for Ohio in 2022; only nine states had higher tax revenues. Thus, the expanded sales tax holiday seems an affordable “vacation” that will economically benefit Ohioans.
Elizabeth Sullivan, opinion director:
Ohio lawmakers are shelling out three-quarters of a billion dollars in taxpayer money (and maybe more, if they miscalculate when the $750 million will be exhausted) just for some not-so-cheap publicity, without making an iota’s difference in the lives of struggling families. If they had all this extra cash, why not gear it to food aid, mental health or other needs?
