Walker’s Sales Tax Holiday Appears to be Doomed

Gov. Scott Walker’s proposed sales tax holiday for back-to-school shopping appears to be doomed, with Republican lawmakers saying Friday that they instead want to reduce or end the personal property tax for businesses.

Republican members of the Joint Finance Committee said they hadn’t seen support for the sales tax break, making it unlikely to survive the Legislature’s re-write of Walker’s budget. There is a strong push, primarily from businesses that are subject to the personal property tax, to eliminate that.

Walker’s sales tax holiday cost an estimated $17 million a year in revenue while getting rid of the personal property tax would cost about $260 million annually.

Walker’s sales tax holiday would apply to certain purchases targeted to families, including clothing under $75, computers costing less than $750 and school supplies. The personal property tax is primarily paid for by businesses for items like boats, furniture, machinery and non-residential property.

Republican lawmakers have been voicing increasing support for doing away with the 170-year-old personal property tax, if they can find a way to pay for it. Eliminating it would create a $260 million hole that could take property tax revenue away from schools and local municipalities if not replaced with funding elsewhere.

While support is growing to reduce that tax, there appeared to be little enthusiasm for the sales tax holiday. The nonpartisan Legislative Fiscal Bureau in a memo released this week identified several other tax cut options that would more precisely target families in the state, while also raising concerns about how the sales tax holiday would be implemented and whether it would work as envisioned.

Seventeen other states have sales tax holidays.

“I have a feeling it probably won’t happen,” said Republican Sen. Luther Olsen, a member of the budget committee. “People are concerned it’s not money well spent.”