Tax reform package to end Tax-Free Weekend

A popular tax holiday geared toward back-to-school shoppers is set to end after this year, and some local school officials say they have concerns about the costs to families.

On Tuesday, Gov. Pat McCrory signed an N.C. General Assembly tax reform package into law — reform that does away with the sales tax holiday known as Tax-Free Weekend.

During the holiday, which has taken place in early August every year since 2002, shoppers can purchase items like school supplies, clothing and computers without paying sales tax.

But in an attempt to increase tax revenues, the General Assembly budget ends the program after this year, something that worries some in Chapel Hill-Carrboro City Schools.

CHCCS spokesman Jeff Nash said in an email that ending the holiday could make it harder for families to purchase school supplies.

“The budget coming from our legislators is harmful in many ways,” Nash said. “The removal of the tax-free weekend will take more money from the pockets of our parents as they equip their children for school.”

James Barrett, a member of the CHCCS Board of Education and a father of two school-age children, said Tax-Free Weekend allows district families to stretch their dollars.

“It’s a significant price difference,” he said. “People are going to have to cut back in what they purchase.”

Barrett said he thought ending the holiday was not a necessary fiscal move for state government.

“I think that for our parents and students, getting school supplies is a very important thing, and the opportunity to do it cheaper for one week a year is not too much to ask,” he said.

“It’s obvious that the General Assembly is very focused on lowering taxes for the wealthy and making the rest of us pay more.”

But while shoppers might see lower savings in the short term, ending the tax holiday would likely be profitable for government.

Douglas Shackelford, associate dean of the MBA@UNC program and a professor in the Kenan-Flagler Business School, said ending the holiday might increase revenues in the long run.

“It’s a tax increase of sorts, and it will collect some revenue that we’ve been letting slip through,” he said.

Shackelford said the current savings of Tax-Free Weekend might not even be significant, given frequent fluctuations in retail prices. He said shoppers would be able to make up for the tax change with adjustments to purchasing habits.

“You can just think about the tax holiday as just another sale,” he said. “I have in mind that I have $100 that I can spend on whatever. And to me, it doesn’t matter who it’s going to — the store, the state, the municipality. When the $100 is spent, I’m coming home.”

He said while many shoppers might not be happy about losing the holiday, he thought most would eventually adjust.

“The first year or two that it doesn’t exist, people will be unhappy,” he said. “We didn’t have the tax holiday for many, many years. School opened in the fall and things went along fine.”