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Gimmick Or Godsend? Colorado Enters Tax Holiday Debate

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DENVER (AP) — Gimmick or godsend, a retail sales tax holiday for consumers is getting a serious look by Colorado lawmakers.

The state House is scheduled to debate a bill to waive state sales taxes on school supplies and low-cost computers for three days in August during prime back-to-school shopping time.

The Democratic proposal cleared a House committee Friday despite Republican complaints that tax holidays are gimmicks that don’t help consumers or retailers.

The bill’s sponsor, Rep. Joe Miklosi of Denver, insists the tax break would help pinched Colorado families get ready for school. He says more than a dozen states now have back-to-school tax breaks and that they boost shopping, and therefore the economy.

“It almost becomes a holiday, everyone going shopping,” Miklosi said.

But skeptics abound on tax holidays that started in the Southeast and are now common up and down the East Coast.

“This strikes me as a mere gimmick that moves money around on three days a year,” said Republican Rep. Bob Gardner.

But Gardner and other Republicans who questioned the idea in the House Appropriations Committee then went on to vote for it because it is a tax break.

“What the heck, I’m all about tax breaks,” said Republican Rep. Cheri Gerou, who is the top-ranking budget-writer in the House.

The proposal was amended so that the sales tax holiday would take effect only if personal income tax receipts rise. The tax question now awaits a vote by the full House, possibly as soon as next week.

Its prospects are fair in the full chamber, which is controlled by the GOP. House Speaker Frank McNulty didn’t endorse the idea Friday, but he didn’t dismiss it, either.

“We always look for ways to help families make ends meet, and if this is a way to help do that, we’ll take a serious look at it,” McNulty said.

Critics point to studies critical of tax holidays, especially the conservative Tax Foundation, which argued in a 2011 report that tax holidays are inefficient and don’t lower citizens’ overall tax burden. Miklosi and other supporters point the fact that Florida revived a sales tax holiday in 2010 after a rival study argued the tax break encourages spending.

Whatever the tax holidays’ effect, they’re enormously popular with consumers. Which means they’re popular with voters, too — a fact that doesn’t escape lawmakers’ attention.

Miklosi is running for Congress against a two-term Republican incumbent in the Denver suburbs. That’s earned him barbs from Republicans in the House. Gardner implied that Miklosi’s support for the holiday gives him something to talk about “on the stump.” Gardner later said he’d propose a further amendment to the holiday extending the sales tax holiday year-round.

Despite his criticism, Gardner said he’ll probably vote for the holiday.

“I’m going to support anything that gives relief to hardworking families that pay taxes,” Gardner said.

As proposed, the tax holiday would waive state sales taxes on clothing items up to $100, including accessories such as belts, and computer items up to $1,000. School supplies such as paper and pens would also be tax-free for the first $50. If triggered by higher income tax collections, the sales tax holidays would last for five years unless lawmakers extend them.

By Kristen Wyatt, AP Writer (© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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