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Think Tank Questions Benefits of Sales Tax Holiday

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Oklahoma’s annual sales tax holiday is underway, but it may not be as good a deal as you think.

Gene Perry with Oklahoma Policy Institute said a common belief is sales tax holidays mean an overall economic boost from people buying more.

"It doesn't encourage people to buy more than they otherwise would have, it just shifts when they buy it, obviously, to the time when they don't need to be paying sales tax," Perry said.

For three days, Oklahoma shoppers pay no sales tax on shoes and clothing less than $100 dollars, which some think helps low-income families save on back-to-school shopping. But the Federal Reserve Bank of Chicago found higher earners are more likely to buy during the holiday.

Perry said there are better ways to help struggling families.

"For example, Oklahoma has a tax credit that goes to all people below a certain income to help offset some of their sales tax burden, and we could expand that tax credit," Perry said.

The state is also on the hook for making up lost sales tax revenue to cities. The most recent Oklahoma Tax Commission report says that was $7.4 million in 2015.

"As we saw this year, the state budget really can't afford to be losing even more revenue when we're struggling to maintain basic health services and to pay teachers a competitive salary and do all sorts of other things," Perry said.

Lawmakers considered doing away with the sales tax holiday this year but ultimately kept it.