SC’s sales tax holiday is a shell game ... and we’re the dupes

I HAVE A BIG vacation coming up in a few weeks, and a long list of things I need to purchase in advance. Nothing elaborate, just a whole bunch of stuff that it takes time to locate and gather up.

I have to work this in between all my normal obligations, and the whole getting a lot of extra work done before I leave thing, so I’ve been trying very hard to stick to a schedule: Take this weekend to purchase the easy-to-find items, these two weekends for these more difficult ones, this weekend for this one how-in-the-world-will-I-ever-find-it purchase. As the departure date draws closer, the wiggle room contracts.

And the state of South Carolina just came oh-so close to blowing up my entire plan.

Fortunately, I took a minute Friday to scroll through the state Chamber of Commerce’s weekly email, where I spotted a link to a news release promising, “SC Sales Tax Holiday to Help Small Business.”

TEST YOUR KNOWLEDGE on the SC sales-tax holiday

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Not that again. As much as I try to wish it away, it comes back, every year. The good news is that the state’s most annoying tax gimmick wasn’t this past weekend. It’s this coming weekend, which meant I was able to scramble my schedule to delay the non-retail chores I had planned for Saturday and front-load some shopping I had on my to-do list for a week later, so the state was not able to steal an entire weekend’s worth of preparations. The bad news is that, well, we’re stuck with that silly sales tax holiday.

This wouldn’t be worth writing about if the only thing it did was crowd too many people into the stores at once, making it a crazy time for any rational person to shop. Unfortunately, that’s not all it does.

Although retailers say the holidays encourage people to buy more stuff than they otherwise would, numerous studies have found that they simply change when people shop. To: all at once. The anti-tax Tax Foundation notes that some retailers actually raise prices during the holidays, and suggests that retailers are fans because they get a free advertising boost.

The Washington think tank argues that the holidays “create complexities for tax code compliance, efficient labor allocation, and inventory management” and “involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating among products and across time, and distorting consumer decisions.”

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Are sales tax holidays good for anyone?

Now, I don’t mind using the tax code to distort consumer decisions. I just want it to be done in a way that advances our common values: jacking up cigarette taxes, for instance, to deter teen smoking, or giving tax breaks to companies that create good-paying jobs in poor areas. Our sales-tax holiday doesn’t even try to do that.

Legislators say the purpose of the holiday is to help parents ready their children going back to school. It’s not. If it were, it would apply only to items that parents need to purchase to send their kids back to school: the notebooks and pencils and backpacks and school clothes and even dorm-room supplies that are on the no-tax list. It would not apply to the wedding gowns and the diapers (baby or adult varieties) and corsets and corset laces, formal clothing (including tuxedos) and furs that also are on the list. Or any of the many other items that just don’t quite fit on that back-to-school shopping list.

If the purpose were to help struggling parents get their kids ready for school, it wouldn’t be available to me and other non-parents, and it wouldn’t be so open-ended: South Carolina alone among the 17 holiday states has no limit on how much tax-free merchandise anyone can buy this weekend.

It’s simply not possible to argue that our state benefits by encouraging people to buy (untaxed) pocketbooks and purses but not (taxed) change purses and wallets … pillows and pillowcases but not the alarm clock on the nightstand next to them … wet suits but not goggles … roller skates that are permanently attached to the boot but not roller skates not permanently attached to the boot. For that matter, you can’t argue that our state benefits by manipulating people into buying back-to-school items during the first weekend of August rather than the second, or the last weekend in July — or midweek.

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The main thing the holiday accomplishes is to create a constituency for itself, to go along with the constituencies we have for our other 110 or so sales tax exemptions. That reduces the chance that the Legislature will ever get rid of any of the exemptions. And that means our state will continue to exempt as many purchases as it taxes, which is the main reason our sales tax is 6 percent to 9 percent, among the highest in the nation.

The state Board of Economic Advisors projects total tax savings this weekend of $2.25 million — which comes to an average of 46 cents for each of the 4.9 million people who call South Carolina home. Of course the people out braving the politically induced crowds will actually save more than that: They’ll also get my 46 cents to split.

This story was originally published August 1, 2016 at 5:05 PM with the headline "SC’s sales tax holiday is a shell game ... and we’re the dupes."