Tax-free shopping starts Sunday in Connecticut

Connecticut's annual sales-tax holiday coinciding with back-to-school shopping kicks off Sunday and runs through Aug. 23.

The tax holiday primarily applies to clothing and footwear costing less than $300 per item.

Gov. Dannel P. Malloy, in an appearance to promote the tax holiday, said this week that the idea is to boost retail sales while helping families "stretch their hard-earned money a little further."

"Retailers specifically plan sales and coupons for the tax holiday that, along with the saving on the sales tax, can mean significant deals for shoppers, " said Tim Phelan, president of the Connecticut Retail Merchants Association, in a statement.

But some tax analysts question the wisdom behind such promotions, saying they provide no significant sales boost, benefit higher-income families the most and reduce needed tax revenues. North Carolina ended its tax-holiday program this year as part of a tax-reform package.

"Sales tax holidays may give consumers a short break from sales taxes on certain items, but they don't change regressive state tax systems," according to the Institute on Taxation and Economic Policy, which issued a brief last month arguing that such gimmicks "have more political than policy benefits."

Sixteen states currently offer a temporary tax break during the back-to-school buying season. Breaks range from a few days to an entire week, costing states a total of $300 million in revenue according to the institute.

Connecticut's tax holiday is considered among the most generous, allowing layaways to qualify for the program - even if full payment is received after Aug. 23. Rain checks also are allowable, but purchase has to be made during the tax-free week.

The National Retail Federation estimates back-to-school shoppers will spend an average of $670 between July and September.

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Twitter: @KingstonLeeHow


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