Sales tax holidays: Economic boost or lost state revenue?

Patricia Zaragoza, 9, checks her back-to-school shopping list at a Target store.

Friday kicks off an annual sales tax holiday in a number of states. From Massachusetts to Alabama, sales tax on everything from socks to laptops will be waived. But not every state wants to leave those tax dollars on the table.

Nancy Dennis, public relations director of the Alabama Retail Association, says as kids get ready to go back to school, consumers aren't just out buying backpacks and clothes.

"They are buying items that are taxed along with the items that are untaxed, and so they're buying gas, they're eating in restaurants." Dennis says Alabama's sales tax holiday has been a big draw for shoppers since 2006, when it was first launched.

But starting next year in North Carolina, no more sales tax weekends, thanks to tax reform recently passed by state lawmakers.

"Last year it was between $13 million and $14 million in sales tax that they gave up," says Christie Burris communications director of  the North Carolina Retail Merchants Association.

Burris says the sales tax holiday is the biggest shopping weekend after Black Friday. And, she says, the state's going to regret it next year when residents travel across state lines in search of tax-free deals.

"Or they'll have the opportunity to shop online where they have the 7 percent sales advantage 365 days a year," she says.

But a spokeswoman for North Carolina told Marketplace that her state just cut its income tax, which, "more than offsets one-time savings from things like weekend sales tax holidays."

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