(An IOWA CAPITAL DISPATCH report) -Iowa’s Annual Sales Tax Holiday will take place Aug. 7-8, exempting clothing and footwear purchases under $100 from the state’s 6% sales tax and 1% local option sales taxes.
The annual holiday — a feature in 20 other states — gives consumers some relief from sales taxes. Proponents of the holiday argue that it helps economic growth because it increases retail activity.
Opponents of the holiday point to a study that says it does not help economic growth because consumers would have shopped at different times. Kathrien Loughead, the vice president of State Tax Policy, said sales tax holidays suggest policymakers recognize that state sales taxes can discourage economic activity. Loughead added that state revenue losses from sales tax holidays are small and she believes revenue would have to be generated from elsewhere to make up for the losses, which would result in the state losing revenue.
Iowa’s tax holiday is shorter than those in some other states, where exemptions can last up to a week and cover a broader range of consumer items.
