The tax free holiday weekend is a busy time and people are usually shopping for back to school stuff without worrying about having to pay taxes, while the retailers are trying to keep up with the demand.
David Szymanski, Director of the Center of Retailing Studies says, "The retailers do see an uptake and increase in their sales based on tax free weekend. So it’s an opportunity to see whether in fact, if extended, it will have a dramatic impact on their sales or not or will we see sales are spread over a period of time."
A state representative from Houston is trying to extend the August tax-free holiday from three days to two weeks. Saying it could save Texans millions of dollars by 2010.
But David Blackwell, with the Mays Business School at A&M says it’s hard to determine if an extension could be good or bad for the economy.
Blackwell says, "It depends on whether consumers actually spend more money total during that period of time than they would of spent during just a weekend. I don't really have a basis for predicting that. It certainly makes it more convenient for consumers to time their purchases to avoid the sales tax by extending it two weeks."
Blackwell says the only downfall to having more tax-free shopping is more consumers will spend to avoid the sales tax and that could decrease state revenue in the short-term.
"On the other hand, if that reduction in sales tax to zero stimulates more consumer spending then that's stimulus to the economy and end up resulting in directly in an increase in state revenue," says Blackwell.
If this bill passes, retailers believe the extension could be a plus for all involved.