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F I S C A L I M P A C T R E P O R T

SPONSOR Jennings

ORIGINAL DATE

LAST UPDATED

8/16/08 HB

SHORT TITLE Sales Tax Holiday

SB 18

ANALYST Gutierrez

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY09

FY10

FY11

($2,541.0)

0

0 Non-recurring General Fund

($2,090.0)

0

0 Non-recurring

Local

Government

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department (TRD)

Responses Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

A one-time 2008 sales tax holiday would run 10 days, from the Friday after Thanksgiving

(November 28, 2008) through the Sunday of the following weekend (December 7, 2008). Non-

taxable items include:

•

Clothing and footwear items costing less than $125 each;

•

School supplies such as pens and paper that are typically used by students in a classroom

setting and that cost $25 or less per item;

•

Computers costing $1,000 or less;

•

Handheld calculators costing $150 or less;

•

Energy Star certified items:

Refrigerators and freezers costing $2,000 or less;

Clothes washers costing $1,000 or less;

Senate Bill 18 – Page

2

Dehumidifiers, dishwashers, room air conditioners, room air cleaners,

ceiling fans, programmable thermostats, compact florescent lamps, battery

charging systems, water coolers, and decorative string lights costing $500

or less.

FISCAL IMPLICATIONS

The total estimated cost in FY2009 is $4.6 million.

SIGNIFICANT ISSUES

Several other states have decided to implement an Energy Star sales tax holiday. Georgia and

Virginia are the two states that enacted this tax holiday in 2006. Although it is difficult to

determine the impact of this holiday, we can assume that these two states continued use of this

tax holiday as well as other states deciding to implement similar tax holidays implies it is a

successful tax break.

Days

Maximum

per Item

Cost 1st Year 2008 Dates Recurring

New Mexico

(proposed)

10

$2,000,

$1,000, &

$500 (1) 2008

Nov. 28-

Dec. 7

No

Georgia

4 $1,500

2006 Oct. 2-5 No

Texas

3 $2,000 (2) 2008 May 24-26 Yes

Vermont

7 $2,000

2008 July 12-18 No

Virginia

4 $2,500

2006 Oct. 10-13 Until 2012

West Virginia

7 $2,500

2008 Sep. 1-7 Until 2011

Energy Star Sales Tax Holiday State Matrix

(2) Texas has a $6,000 dollar limit on Air Conditioners, $2000 on Refrigerators, and no limit on

other products

(1) New Mexico would have a limit of $2,000 on refrigerators and freezers, $1,000 on clothes

washers, and $500 on all other items

Source: Taxation and Revenue Department

ADMINISTRATIVE IMPLICATIONS

This bill will have minimal impact on the Taxation and Revenue Department: instruction and

publication changes, taxpayer outreach, staff training and development of audit and compliance

procedures.

BLG/mt