Tax break signals end of summer
Back-to-school shopping may be the ultimate bummer for students, a surefire signal that the lazy days of summer are numbered.
Nevertheless, parents have a reason to hit the stores this weekend: Iowa hosts its annual sales tax holiday today and Saturday.
Now in its seventh year, the event is meant to boost retail sales and offer families a reprieve from sales tax, which is 5 percent statewide and 7 percent in Scott County due to two tax additions.
Launched in New York in 1997, the sales tax holiday has become popular across the country. This year, 13 states, plus the District of Columbia, are offering the breaks. Illinois does not offer a statewide sales tax break.
While some states offer tax relief on school supplies and computer equipment, Iowa’s tax-free days are limited to clothing and shoes that cost less than $100.
“It’s legislated that it’s only everyday footwear and clothing,” said Renee Mulvey, spokesperson for the Iowa Department of Revenue. “To change it you’d have to change the legislation.”
According to Mulvey, retailers and shoppers alike have come to support the event over the years. Though some retailers initially resented having to alter their registers from midnight on Thursday to midnight on Saturday to reflect the change in sales tax charges, many now schedule annual sales along with the sales tax holiday, she said.
The numbers show customers have grown to like the breaks: In 2000, Iowa shoppers saved an estimated $1.6 million over the two days. In 2004, the latest year for which the department has data, the number had grown to $2.4 million, Mulvey said.
Many shoppers have come to rely on the tax break as the time to start their fall shopping, said Jenna Poyner, director of marketing at NorthPark Mall in Davenport. The two days of the holiday regularly attract extra shoppers, she said.
“It really kicks off people’s back-to-school shopping,” she said.
The tax-free event also draws shoppers from surrounding states that do not offer the breaks. Border cities such as Davenport particularly see an influx of out-of-state visitors, said Jim Henter, president of the Urbandale, Iowa-based Iowa Retail Federation.
“In the first few years, 30 percent of cars at Iowa malls had Nebraska plates,” Henter said. “We see a huge increase in numbers in our border communities.”
Across the river in Moline, SouthPark Mall offers its own two days of discounts. Recognizing the success its sister mall in Davenport experienced during the tax holiday, SouthPark spearheaded 7 percent discounts at select stores, said Darcy Jacks, manager of mall marketing. Twenty-four retailers have already signed up to participate, she said, and some may offer discounts as high as 20 percent.
The reductions have helped draw 10 percent to 20 percent more shoppers to the mall each year, Jacks said. She anticipates strong sales this year, particularly because of scorching temperatures outside. Shoppers may flock to malls to enjoy the air conditioning — and will likely shop when they’re there, she said.
“People are wanting to get out of the elements and come inside,” she said.
However, families’ own cooling bills and high gas prices may end up tempering all-out shopping sprees for clothes, Henter said.
“But then again, school’s right around the corner,” he said.
Katie Vaughn can be contacted at (563) 383-2282 or kvaughn@qctimes.com.