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Cities say tax holiday brings no major revenue impact

Published 11:47am Wednesday, August 1, 2012

By NEAL WAGNER / City Editor

Officials in Shelby County’s two largest cities said they have not seen any significant drops in sales tax collections over the past few years as a result of the tax-free weekend on back-to-school items.

This year’s sales tax holiday, which will mark the seventh straight year of the tax-free weekend, will be held from 12:01 a.m. on Friday, Aug. 3 to midnight on Sunday, Aug. 5.

Some Shelby County cities, such as Pelham and Alabaster, and the county itself have participated in the August sales tax holiday every year since its inception, and city officials said they have seen little effect on their August sales tax revenues.

During the weekend, shoppers in participating cities do not have to pay state, county or municipal sales taxes on items included in the holiday.

Alabaster Revenue Department officials said they have not seen any “noticeable reductions” in the amount of sales tax collected over the past several years in August compared to other months. Alabaster’s Colonial Promenade is one of Shelby County’s largest shopping centers, and many of its retailers sell items included on the back-to-school sales tax holiday list.

“We think this is an excellent benefit to the community,” said Alabaster City Administrator George Henry.

Pelham Revenue Director Mike Morgan said his department recently evaluated the city’s sales tax collections for July, August and September of 2005-2010, and was unable to determine if the tax holiday has had any effect on the city’s tax revenues.

“It was inconclusive. It’s really hard to tell if the tax holiday has an impact or not,” Morgan said. “There are too many contributing factors for us to make an accurate determination as to what impact, if any, the sales tax holiday had on our tax revenue.”

Morgan said the tax holiday may draw shoppers to Pelham from outside the area who also purchase items not included on the tax-free list.

In addition to Alabaster and Pelham, Calera, Chelsea, Columbiana, Hoover, Montevallo, Westover and Wilsonville and Shelby County also will participate in this year’s tax holiday.

For a full list of items included in the tax-free weekend, visit Revenue.alabama.gov/salestax/salestaxhol.htm.

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