BREDESEN PROCLAIMS TENNESSEE’S FIRST ANNUAL SALES TAX HOLIDAY A SUCCESS
FAMILIES SAVE $14.8 MILLION, CITIES AND COUNTIES SET FOR ADDITIONAL REVENUE
Nashville – Governor Phil Bredesen is pleased to report that Tennessee’s first annual sales tax holiday was a resounding success for Tennessee families and will help local governments as well. Held Aug. 4-6, the holiday provided valuable financial savings on clothing, school supplies and computers during the back-to-school shopping season.
“We had the resources to do something new this year to help save families money, and with support from the General Assembly, Tennessee launched its first sales tax holiday successfully in August,” Bredesen said. “This new tax holiday underscores my commitment to keep education as our No. 1 priority.”
During the sales tax holiday, no state or local sales taxes were charged on most school supplies and clothing priced $100 or less per item and on computers priced $1,500 or less. The holiday also included purchases of qualified items bought by mail, telephone, or Internet.
The state’s first sales tax holiday saved families an estimated $14.8 million, as of the latest reporting period. Shoppers did their homework for this back-to-school event, becoming familiar with tax-exempt items, planning ahead, and taking full advantage of this much-deserved tax break.
Governor Bredesen’s 2006-07 budget included funds to hold local governments harmless from lost sales tax revenue from the holiday. While calculations aren’t yet final on local government payments, preliminary figures indicate that $3.7 million dollars will be distributed, based on a 7.6% increase in sales tax collections. Local governments will also benefit from increased sales of taxable items during the holiday.
Overall sales tax savings estimates will change as retailers continue to file amended and additional returns. Although the sales tax holiday is held during the first weekend of August, the results are not available until now because retailers don’t report August sales until late September.
Next year, Tennessee families will have two sales tax holidays: a one-time holiday April 27-29 and the second annual holiday Aug. 3-5. Both holidays will include the same exempt items.