Tax holiday

A tax holiday is a temporary reduction or elimination of a tax. Governments usually create tax holidays as incentives for business investment. The taxes that are most commonly reduced by national and local governments are sales taxes. In developing countries, governments sometimes reduce or eliminate corporate taxes for the purpose of attracting Foreign Direct Investment or stimulating growth in selected industries.

Tax holiday is given in respect of particular activities, and sometimes also only in particular areas with a view to develop that area of business.

Sales tax holidays in the United States

A statewide sales tax holiday was first enacted by the New York Legislature in 1996 and enabled the first tax-free week in January of 1997. Local governments in New York were given the option of whether or not to participate. ^[1] Since then, the initiative has been adopted by thirteen states. It commonly takes place as a form of tax-free weekend lasting Friday through Sunday, usually during a major shopping period for necessities, such as just before school starts. During that period, sales tax is not collected on selected items, such as clothing and school supplies. The items subject to the sales tax exemption may also be restricted by price (for example, clothing up to $100), but consumers are free to buy unlimited quantity of items.

As with other sales taxes, visiting residents of non-participating states who purchase tax-free goods (holiday or not) may still have to pay "use tax" on their goods that they take home.

Five states in the U.S. (Alaska, Delaware, Montana, New Hampshire and Oregon) do not impose general sales taxes at all but may have specific excise taxes on gasoline, cigarettes, alcohol, meals, etc. See Sales taxes in the United States for details.

See also

• Tax competition
• Tax exemption
• Sales taxes in the United States
• Gas tax holiday
• Use tax

References

1. ^ http://www.ncsl.org/programs/pubs/1011tax.htm
2. ^ "Sales Tax Holiday Announced for Massachusetts". http://www.mass.gov/?pageID=dorutilities&L=1&sid=Ador&U=sales_tax_holiday. Retrieved 2007-08-11. 
3. ^ "Sales Tax Holiday (Sales Tax Holiday 98-490)". Texas Comptroller of Public Accounts. http://www.window.state.tx.us/taxinfo/taxpubs/tx98_490/tx98_490.html. Retrieved 2007-08-18. 

External links

2008 State Sales Tax Holidays - Federation of Tax Administrators

http://www.window.state.tx.us/taxinfo/taxpubs/tx98_490/tx98_490.html

Alabama

Connecticut

District of Columbia

Georgia

Iowa

Louisiana

Missouri

New Mexico

North Carolina

Oklahoma

South Carolina

Tennessee

Texas

Vermont Virginia

West Virginia

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