What others are doing
Many southern states following their neighbors by offering sales tax holiday

LAWRENCEVILLE - It won't be long before Gwinnett County Public School students head back to class - Aug. 13 to be exact - and that means sales tax holiday time.

For the sixth straight year, Georgia will offer shoppers an opportunity to purchase certain clothing items, school supplies, computers and computer accessories without paying state and local taxes. This year's sales tax holiday will begin at 12:01 a.m. Thursday and continue until midnight Aug. 5.

But Georgia shoppers won't be alone in their freedom from sales taxes next weekend.

Every state touching Georgia's border will have a sales tax holiday this year and all coincide with some or all of the days Georgia will have its holiday.

Coincidence? Craig Shearman of the National Retail Federation (NRF) thinks not.

"You can certainly see a pattern where one state does it and the state next door starts doing it the next year and the state next to that one starts doing it the year after," said Shearman, the NRF's vice president of government affairs.

South Carolina led the way with a sales tax holiday in 2000. North Carolina followed in 2001. Georgia then followed with a sales tax holiday in 2002 in what seemed to be a response to its neighbors to the north and the sales tax holiday that existed in Florida. In 2006, Alabama and Tennessee jumped on board.

In some ways, the holiday appears to be an attempt to keep residents shopping within their own state during the back-to-school season - a time when families are expected to spend an average of $563.49 on school supplies, according to the NRF.

Terry England, a Georgia state legislative representative from Barrow County who sponsored the sales tax holiday legislation, said he could understand if Alabama and Tennessee had in fact enacted its holidays in response to Georgia's.

"I know if the tables were turned, if our business was leaving the state and going across the border, we'd sure try and find a way to keep it here," England said. "I wouldn't be a bit surprised if theirs was a response to ours."

But that potential loss of business to other states really only applies to border cities at best, said Jeff Humphreys, director of economic forecasting at the University of Georgia's Terry College of Business.

"With gas prices the way they are, it's hard to see it being worth the drive and being able to offset that cost," Humphreys said.

The result, however, is tax relief all across the state, benefiting not just border communities but also areas further in the state like Gwinnett.

Still, the sales tax holiday serves as a ploy to send even Gwinnett shoppers to local stores that might not have gone otherwise.

"At this point, it's really more of a marketing opportunity more than anything else," Humphreys said. "It's another opportunity to encourage buying locally and in the state rather than buying out in cyberspace."

But savings of just six percent in Gwinnett can't compare to some savings offered through the Internet, so why does the sales tax holiday still encourage shoppers to actually go out to stores?

"Americans have hated paying tax going all the way back to the Boston Tea Party," Shearman said. "With the sales tax holiday, if a retailer were to offer 5 percent off as a sale, customers would laugh at them. They know a sale as 25 percent off or 50 percent off. But when they can save that save 5 percent by not paying taxes, there's a huge psychological appeal that goes far beyond the amount of money saved."