State lawmakers vote to make Ohio’s annual sales tax holiday permanent

Ohio lawmakers on Wednesday approved a permanent sales tax holiday, sending the bill to Gov. John Kasich for his signature. Kasich signed bills for single-year tax-free weekends in 2015, 2016 and 2017.

The three-day tax holiday will begin the first Friday of every August. Clothing and shoes priced at $75 or less and school supplies or instructional materials that cost $20 or less will be exempt from state and local sales tax on those days.

The sales tax holiday runs Aug. 3-5 this year.

The bill also allows educational service centers to raise revenue through new local taxes for school safety, security and mental health services. The House passed the bill Wednesday in a 91-3 vote and the Senate approved it earlier in a 31-0 vote.

“The sales tax holiday has been a win-win scenario for both families and businesses in Ohio over the years, and I’m glad to support its continuance as an annual occurrence,” said State Representative Riordan McClain (R-Upper Sandusky). “Beyond that, I think including the amendment to allow ESCs to seek funding for school safety and mental health services creates a beneficial tool to combat potentially tragic incidents in Ohio schools.”

Ohio consumers saved $3.3 million in taxes on $46.75 million worth of back-to-school purchases in 2015, according to research by the University of Cincinnati Economics Center commissioned by the Ohio Council of Retail Merchants. Sales of non-exempt items during the weekend generated $8 million, leading to a net benefit to the state of $4.7 million in additional tax revenue, according to the report.

The nonpartisan Legislative Service Commission had a different take on the fiscal impact of the law. It estimated the state could lose $16.3 million in tax revenue from the sales tax holiday in the first year. The local government and library fund would get $600,000 less and transit authorities, which can apply piggyback sales taxes, would lose $4 million. Those amounts are expected to grow in future years.

The Buckeye Institute, a conservative leaning Ohio think tank, opposed the tax holiday, calling it a “gimmick.” It cited a Tax Foundation study that found some retailers hike prices for the tax-free weekend.

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