A little something extra: Sales tax holiday a (mild) hit with shoppers

August 4, 2018

After picking up school supplies for her children and a few items of clothing for her husband, Jenna Dunnihoo took a break to grab lunch with a friend on State Street.

Then it was back to “shopping the sales” for more school supplies before Wisconsin’s first-ever sales tax holiday, which began Wednesday, runs out this weekend.

“How much did that save me? I don’t know, probably $10,” Dunnihoo said.

Through Sunday, shoppers across Wisconsin can avoid paying sales tax on certain items of clothing and school supplies that cost $75 or less, computers meant for personal use up to $750, and computer accessories, such as printers and printer ink, up to $250.

Shoppers were generally enthusiastic about the tax holiday, which is targeted at back-to-school shopping, while retailers gave mixed reviews, with some finding it difficult to manage which items were tax-exempt and which ones weren’t.

Standing outside the Forever 21 store as her daughter and friends went on a scavenger hunt in West Towne Mall on Wednesday, Cassie Jemilo, a teacher in the Stoughton School District, said she was aware that Wisconsin would be holding the tax holiday over the weekend, but wasn’t exactly sure when it started.

“It helps to save money wherever you can, especially on a teacher’s budget,” Jemilo said.

Her plan was to go out over the weekend to buy clothes and school supplies for her children as well as supplies for her classroom.

“That’s a huge benefit for teachers. That saves a lot of money,” Jemilo said, referring to the $75 tax-exempt threshold on individual school supplies.

Another mother and daughter pair at the West Towne Mall on Wednesday were unaware of the tax holiday, but said the clothes they had already purchased for the upcoming school year likely would not have met the $75-per-item limit.

At nonprofit clothing store Serrv, 224 State St., manager Sarah Wilcox said the holiday is certainly beneficial for the consumer, but it presented challenges for the small business as inventory had to be reviewed manually and noted in the point-of-sale system if the merchandise qualified.

Cashiers and managers for nationally branded stores, though, said changes to their point-of-sale systems were handled by the corporate level.

Wisconsin has a 5 percent sales tax, and Dane County adds another 0.5 percent. The state Department of Revenue estimated the state will forgo $14.8 million in sales taxes and expected local governments will forgo $1.26 million in sales taxes over the five-day period.

“I didn’t even know it was happening,” Jeff Taylor, a father of two, said of the tax holiday from the comfort of a chair in a West Towne Mall seating area.

His children’s supplies for the upcoming school year had already been pre-ordered and would be delivered to their school, Taylor said, but he was considering doing some clothes shopping for them while the exemption is in play.

Taylor saw, though, the biggest winners of the tax holiday as those shopping for personal computers since an exemption limit of up to $750 could net about $40 in tax savings.

One shopper at the H&M store in West Towne Mall called the tax holiday “an election-year bribe” — a sentiment shared by some state Democratic leaders when the holiday was voted into law this spring — while another customer seemed pleasantly surprised upon learning about it at the check-out counter.

The Republican-controlled state Legislature passed, largely along party lines, the sales tax holiday in March, along with a $100-per-child tax rebate measure, as a result of a budget surplus. Initially scheduled for only two days, Gov. Scott Walker extended the tax holiday to five days using his veto power.

On State Street, Kim Fredrickson, the controller for University Book Store, said she set up the tax-free status on the company’s point-of-sale system for qualifying products across its five stores. It was easy enough as the system already had merchandise categorized as clothing and school supplies, she said.

To promote the tax holiday, Fredrickson said signs had been posted on the doors, and an email blast was sent out.

It might be difficult to determine whether the holiday produces more business for the University Book Store location at 711 State St., Fredrickson said, because business was already expected to impacted by the parents and incoming freshman at UW-Madison in the city for an orientation seminar.

“Perhaps some of them bought more than they would because of the tax-free (status),” she said. “It’s the first time Wisconsin’s doing this, so we don’t have a good idea what it’s going to bring.”

If the tax holiday is repeated, though, Fredrickson said she hopes textbooks would be included in the future due to their high cost for college students.

“Maybe Gov. Walker could change it next year and include textbooks. I’d love to see textbooks included in this holiday,” she said.

Mike Hutchens, a manager at Campus Street Sportswear, 636 State St., estimated about 80 percent of the customers he checked out Wednesday were aware of the holiday, saying “everyone seemed pretty happy about it.”

Having a no-tax button on the store’s point-of-sale system also made it easy for ringing up transactions, he said.

Hutchens said he expected the weekend to be busier than normal, but he said it could be difficult to determine whether it would be from the tax holiday or the CrossFit Games, which are taking place in Madison concurrently with the exemption period.

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