Originally Posted Online: Aug. 06, 2010, 5:52 pm
Last Updated: Aug. 06, 2010, 7:13 pm
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By Nicole Lauer, nlauer@qconline.com
MOLINE — Gov. Pat Quinn was criticized Friday for taking a three-stop trip in the state-owned plane to tout Illinois’ first sales tax holiday that launched Friday.

The governor traveled to Chicago, Rockford and Moline to call attention to the kickoff of the back-to-school sales tax holiday that offers Illinois shoppers a 5 percent sales tax break on clothing purchases that ring in at $100 or less each and school supplies through Aug. 15.

During his afternoon stop at Moline’s Kmart on Avenue of the Cities, a supporter of Rich Morthland, the GOP District 71 state representative candidate, distributed a press release stating Gov. Quinn was wasting taxpayer dollars on a campaign trip at a time when the state faces a $13 billion budget deficit.

“Gov. Quinn’s visit to the Quad Cities demonstrates just how out-of-touch he has become,” Mr. Morthland stated in the release. “The back-to-school tax holiday is a wonderful thing, but I don’t see why it requires him to waste more taxpayer dollars on flights across the state.”

Ashley Cross, a media contact for Gov. Quinn, confirmed Friday afternoon that the governor was traveling on the state-owned plane and the trip was state funded.

Mr. Morthland called Gov. Quinn’s stops to retailers Friday a “Blagojevich-inspired solution.”

“We need real solutions that save taxpayers real dollars, not election-year campaign stunts disguised as state business,” he stated.

Patty Schuh, a spokeswoman for GOP candidate for governor Sen. Bill Brady, also was not supportive of the trip.

“It is rather stunning to us that the governor would use the state plane to fly around and trumpet a sales tax holiday at the same time he’s calling for the largest tax increase in Illinois history.”

In response to criticism, Gov. Quinn pointed out Mr. Morthland is in favor of the sales tax break; as is Sen. Brady, according to Ms. Schuh. Gov. Quinn said his intention was to reach out to the public, something his predecessors Rod Blagojevich and George Ryan failed to do.

“They were criticized for not getting out,” Gov. Quinn said.

Gov. Quinn also said “naysayers” are not helping to bring back jobs and spur the economy, two things Illinois desperately needs.

But Dan Long, the chief economist for the Illinois legislature, downplayed the holiday’s impact on the state.

This will be the state’s first sales tax holiday, so Long’s office, the Commission on Government Forecasting and Accountability, studied sales tax holidays in Tennessee and Maryland. In both cases, both states lost out on sales tax revenue during the holiday.

Using those states as guidelines, the commission estimated Illinois could lose anywhere between $20 million and $67 million in sales tax revenue.

Long pointed out that the state brings in $6.5 billion in annual sales tax revenue.

“(Sales tax revenue) is the second largest revenue source behind the income tax. … When you’re talking $20 million, even $60 million, it’s a significant amount of money, but not a huge impact in terms of what we bring in in overall sales tax revenue,” he said.

Rob Karr, vice president of the Illinois Retail Merchants Association, said sales tax revenue alone does not paint the entire picture of a sales tax holiday.

He said the state actually stands to gain money from a holiday because people are more willing to spend the money they save from the holiday on other items, such as food and gas.

Karr cites one report by the Washington Economics Group, a private consulting firm, on the economic impact of a Florida sales tax holiday.

The WEG estimated that Florida lost out on $118 million in state and local taxes from boosted economic activity by not holding a sales tax holiday in 2009.

Amy Baker, the chief economist for the Florida legislature, said her office typically does not conduct full economic impact studies for tax holidays and so could not verify the WEG’s findings.

A National Retail Federation survey indicates the average American will spend $606 on back-to-school supplies this year. The Quinn administration says that the same family will save 5 percent under the holiday, or $30.30.

Portions of this story written by Kevin Lee of Illinois Statehouse News.

Tax holiday facts

What is is: As part of the state’s first-ever sales tax holiday, shoppers in Illinois from Friday through Aug. 15 don’t have to pay the 5 percent sales tax on certain back-to-school purchases.

What qualifies: Clothes and footwear less than $100 and school supplies purchased during that time period would be exempt from the state’s 5 percent sales tax. Local sales taxes would still apply on those items. The holiday does not include textbooks, computers or other electronics. For a full list on what items are included as part of the Illinois sales tax holiday, visit the website for the Illinois Department of Revenue: www.revenue.state.il.us/SalesTaxHoliday.htm.

Why it matters: Even while grapping with a state-record $13 billion budget deficit, Illinois figures such a program would entice consumers during a time of year that’s often vital to many retailers. Illinois families tend to spend $800 million to $1.2 billion on back-to-school items, meaning the sales-tax break would save them $40 million to $60 million in tax payments, according to the state’s Department of Revenue.
What is the popularity?: Some 20 states offer some form of sales-tax “holiday” on back-to-school purchases, generally during a three-day August period.

Source: The Associated Press