Updated 2 yearss ago
State economists acknowledge the upcoming “Freedom Week” tax holiday is uncharted territory when it comes to estimating reductions in tax revenue.
Lawmakers approved the first-of-its-kind tax holiday, which will run from July 1 through July 7, to help spur people to get out and enjoy activities after being cooped up at home during the coronavirus pandemic.
During the holiday, people will be able to avoid paying sales taxes on tickets purchased for such things as live music, athletic contests, in-theater movies, cultural events and entrance to museums and state parks. Tickets could be purchased during the week for events that occur later in the year, including annual passes. The holiday will also provide sales-tax exemptions for such outdoor equipment as tents, grills, bicycles, kayaks and fishing supplies.
“It's hard to know (the impact on tax revenues), because we've never done this before. And this is a brand new time of year for us,” Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said Monday. “So, we don't know how much attention it will get during that period. But I still, as we add stuff, I think there's more opportunities for businesses to have collections of items and try to get some synergy from, ‘Hey, when you're here buying this, buy this and this and this,’ because they're all subject to the new sales tax holiday.”
Economists initially projected the period would reduce state and local revenue by $54.7 million. The Freedom Week holiday was part of an overall $196.3 million tax package that also included more-traditional tax holidays for back-to-school shoppers and people buying hurricane supplies.
One question posed by state economists is whether the tax break will cause people to rush out and buy kayaks and other sporting goods or tickets for events. A second, and bigger wild card, is whether businesses and shoppers know about Freedom Week.
“I know it's being well-advertised in our office because we have ‘Freedom Week’ flyers all over the place,” Baker said. “Hopefully, it's being well-advertised elsewhere.”