Tax holiday
Encyclopedia
A tax holiday is a temporary reduction or elimination of a tax. Programs may be referred to as tax abatements, tax subsidies, tax holidays, or tax reduction programs. Governments usually create tax holidays as incentives for business investment. Tax holidays have been granted by governments at national, sub-national, and local levels, and have included income, property, sales, VAT, and other taxes. Some tax holidays are extrastatutory concessions, where governing bodies grant reduction in tax not necessarily authorized within the law. In developing countries
, governments sometimes reduce or eliminate corporate tax
es for the purpose of attracting Foreign Direct Investment
or stimulating growth in selected industries.
A tax holiday may be given in respect of particular activities, in particular areas with a view to develop that area of business, or to particular taxpayers.
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.
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
, governments sometimes reduce or eliminate corporate tax
Corporate tax
Many countries impose corporate tax or company tax on the income or capital of some types of legal entities. A similar tax may be imposed at state or lower levels. The taxes may also be referred to as income tax or capital tax. Entities treated as partnerships are generally not taxed at the...
es for the purpose of attracting Foreign Direct Investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
or stimulating growth in selected industries.
A tax holiday may be given in respect of particular activities, in particular areas with a view to develop that area of business, or to particular taxpayers.
Sales tax holidays in the United States
In New York, a statewide sales tax holiday was first enacted by the New York Legislature in 1996 and enabled the first tax-free week in January 1997. Local governments in New York were given the option of whether or not to participate. 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
Use tax
A use tax is a type of excise tax levied in the United States. It is assessed upon otherwise "tax free" tangible personal property purchased by a resident of the assessing state for use, storage or consumption of goods in that state , regardless of where the purchase took place...
" on their goods that they take home.
| State (Or Capital) | Items Included | Period | Days |
|---|---|---|---|
| Alabama | clothing, computers, school supplies, books | 1st weekend in August | 3 |
| Arkansas | clothing, school supplies, books | 1st weekend in August | 2 |
| Connecticut | clothing | 3rd week in August | 7 |
| District of Columbia | clothing, school supplies | August and November | 9 |
| Florida | clothing, school supplies, books | 2nd week in August | 3 |
| Georgia | clothing, school supplies, computers | 1st weekend of August | 4 |
| Iowa | clothing | 1st weekend of August | 2 |
| Louisiana | all TPP - $2,500, hurricane preparedness items - $1,500, firearms, ammunition and hunting supplies | 1st weekend of September | 2 |
| Massachusetts | school supplies, computers, sports equipment, health & beauty aid | 2nd weekend of August | 2 |
| Maryland | clothing & footwear | August 14–20 | 7 |
| Energy star products | Feb. 19-21, 2011 | 3 | |
| Missouri | clothing, school supplies, computers | 1st weekend in August | 3 |
| New Mexico | clothing, school supplies, computers | 1st weekend of August | 3 |
| North Carolina | clothing, school supplies, computers, sport equipment | 1st weekend of August | 3 |
| Oklahoma | clothing | 1st weekend of August | 3 |
| South Carolina | clothing, school supplies, computers | 1st weekend of August | 3 |
| Tennessee | clothing, school supplies, computers | 1st weekend of August | 3 |
| Texas | clothing, diapers, backpacks, school supplies | 3rd weekend of August | 3 |
| Virginia | clothing, school supplies, green appliances, hurricane preparedness items | May, August, October | 3 |
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
Sales taxes in the United States
There is no federal sales or use tax in the United States. 45 states and the District of Columbia impose sales and use taxes on the retail sale, lease and rental of many goods, as well as some services. Many cities, counties, transit authorities and special purpose districts impose additional local...
for details.
See also
- Tax competitionTax competitionTax competition, a form of regulatory competition, exists when governments are encouraged to lower fiscal burdens to either encourage the inflow of productive resources or discourage the exodus of those resources...
- Tax exemptionTax exemptionVarious tax systems grant a tax exemption to certain organizations, persons, income, property or other items taxable under the system. Tax exemption may also refer to a personal allowance or specific monetary exemption which may be claimed by an individual to reduce taxable income under some...
- Sales taxes in the United StatesSales taxes in the United StatesThere is no federal sales or use tax in the United States. 45 states and the District of Columbia impose sales and use taxes on the retail sale, lease and rental of many goods, as well as some services. Many cities, counties, transit authorities and special purpose districts impose additional local...
- Gas tax holidayGas tax holidayIn United States politics, the gas tax holiday or the gas tax loophole is a proposal made by presidential contenders Arizona Senator John McCain and New York Senator Hillary Rodham Clinton to suspend the federal excise tax on gasoline from Memorial Day to Labor Day in the year 2008...
- Use taxUse taxA use tax is a type of excise tax levied in the United States. It is assessed upon otherwise "tax free" tangible personal property purchased by a resident of the assessing state for use, storage or consumption of goods in that state , regardless of where the purchase took place...
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