Governments say benefits of sales tax holiday outweigh costs

MONTGOMERY, AL (WSFA) - More counties and cities will participate in this year's sales tax holiday than participated last year.   During the holiday, the 4% state sales tax is suspended and local governments can decide to suspend their sales taxes, as well.

272 counties and cities will participate this year, that's up from 267 last year.  But with tight budget times, governments say they need all of the revenue they can get.  Leaders tell WSFA 12 News the benefits outweigh the costs.

While the sales tax holiday brings shoppers to the stores, it hasn't always been a good thing for City of Montgomery's pocketbook.  Last year, was the first time sales tax revenues increased during the month of the holiday.

"In the original concept, four or five years ago, the city didn't have the capability to limit it to certain items," said Mayor Todd Strange.

He said that issue has been fixed and he's in full support of the holiday.

"When you have the opportunity to help the people with some kind of tax break is the right thing to do as long as it doesn't disadvantage the city," Strange said.

Statewide, sales tax revenues have gone up every August since the holiday began, except in 2009.  That decline was blamed on the economy.  Nancy Dennis with the Alabama Retail Association says there's a reason why revenue increases during the sales tax holiday.

"It's great as a boost for the economy and kids getting schools stuff and me being able to get clothes for schools and the books," Dennis said.

Tallapoosa County, Fort Deposit, Ariton and New Brockton are among the entities joining the holiday for the first time.  The holiday begins at 12:01 A.M. Friday, August 5, to Midnight Sunday August 7.

Copyright 2011 WSFA 12 News.  All rights reserved.