Ask The Experts: Are Sales Tax Holidays A Good Idea?

Calvin Blackwell – Associate Professor, Department of Economics & Finance, College of Charleston

Is there a significant economic benefit when states observe sales tax holidays?

“If by economic benefit, you mean increased spending, then yes, sales tax holidays appear to increase economic activity. Removing the tax reduces the cost to consumers, which they obviously like. Removing the tax also benefits sellers, because they get a higher price (although the consumer’s price falls, the seller’s net-of-tax price actually rises when the tax is removed) and they are able to sell more units

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