Document: Getty Images
The economists are right about Florida’s sales tax holidays. From the impact of the Trump tax cuts to transitory inflation, you’ll be hard-pressed to find a profession with more people who’ve been consistently way wrong than economists in recent years. Yes, the analysis and subsequent story by the Sentinel, entitled “Economists deride Florida sales tax holidays as a gimmick with little benefit”, was designed to be a hit piece, but yes, the premise of the analysis is accurate. Florida’s sales tax holidays are largely political gimmicks.
For years we’ve grown accustomed to hurricane and school supply sales tax holidays in Florida. This year they’re not only happening but they’ll last for two weeks. That’s in addition to a gas sales tax holiday in October and the return of the “Freedom Week” sales tax holiday in July along with a new “tool time” sales tax holiday in September. Yes, they sound fun, and the thought of Tim “The Tool Man” Taylor, brings back happy memories, but it’s not exactly good economic policy.
Why? Let's start here. Do you actually use them? Probably not.
Analysis shows that 80% of Florida households don’t intentionally make use of Florida’s sales tax holidays. And as for those who do, that’s often not a good thing either. It’s been a while since I’ve talked about creating artificial consumer behavior because we’ve had bigger fish to fry in Florida in recent years than worrying about sales tax holidays, but in times previous I’ve talked about the problems created by these holidays. It’s like this. Those most likely to intentionally time purchases with sales tax holidays are often those who are the most likely to do so using debt. Florida’s sales tax rate is 6%. Currently, the average credit card APR is over 18%. Instead, the better policy would be to add up the total value of the sales tax holidays and reduce the state sales tax rate on all purchases throughout the year by the nominal rate decrease. That way all people would benefit all the time from lower tax rates generally. Speaking of the legislature and politics