Statewide back-to-school sales tax holiday to help consumers

</element><element id="paragraph-1" type="body"><![CDATA[ In one week, shoppers will flock to Illinois stores in search of shirts, shoes, and school supplies.

Thanks to the state's first-ever Sales Tax Holiday, this year's back-to-school season is expected to draw shoppers in droves for 10 days, from Friday, August 6 through Sunday, August 15. But the statewide holiday will do much more than save families a few bucks. It will also benefit retailers, their employees, and the state economy.

"The road to recovery goes through retailing and consumers, and Illinois' first-ever sales tax holiday will go a long way in aiding these efforts," said IRMA President & CEO David F. Vite.

The Sales Tax Holiday will suspend the State's Sales Tax of 5 percent on eligible school supplies, clothing, and footwear while leaving the 1.25 percent rate paid to local governments. The tax exemption applies to clothing and footwear with a retail selling price of less than $100. However, computers and computer supplies, PDAs, and cameras are not eligible.

The average American family will spend $606 on back-to-school supplies his year, according to a National Retail Federation survey. With the Tax Holiday in place, that same family in Illinois would save $30.30 on sale tax.

While the back-to-school season typically starts at the end of July and runs into September, the tax savings incentive is expected to draw a majority of shoppers to stores during the second week of August, driving up sales in all retail sectors.

The Sales Tax Holiday will also encourage out-of-state consumers to shop in Illinois stores, shifting tax revenue from neighboring states. With Iowa holding a sales tax holiday on Aug. 6-7, and Missouri holding a sales tax holiday from Aug. 6-8, Illinois can expect many shoppers from those states the second week of August.

The additional expenditures will increase the state's sales tax revenue while the need for additional retail workers will boost income tax revenue.

Across the nation, 18 other states have held sales tax holidays, all of which have been successful. Each has generated a positive economic impact to the economy of their states. According to a study of the Florida Sales Tax Holiday by the Washington Economics Group (WEG), the tax holiday has a positive economic impact, increasing gross sales about 8 percent for that month.

The WEG analysis found that Florida would have seen an increase in economic activity of about $1.7 billion if it held a tax holiday in 2009. It would have given the state a net increase of $118 million in state and local taxes taxes, according to the report.

"This will be a boost to Illinois and it comes at a very important time," Vite said. "Consumers and businesses have been crying out for relief during this difficult economic downturn."