"These figures prove Ohio's sales tax holiday helped consumers enjoy lower taxes while boosting state and local government revenues," said Gordon Gough, president and CEO of the Ohio Council of Retail Merchants. "In short, increased revenue resulted from a reduction in taxes, not an increase."
CLEVELAND, Ohio -- Ohio's one-time 2015 sales tax holiday saved Ohio consumers $3.3 million in taxes and gave the state another $4.7 million in Ohio sales tax revenues, according to research by the University of Cincinnati Economics Center.
Focus on Ohio's Future, the research arm of the Ohio Council of Retail Merchants, announced the figures as part of the retail council's testimony on Wednesday before the Ohio Senate's Ways and Means Committee that the back-to-school sales tax holiday should be extended.
The sales tax holiday, which took place Aug. 7 to 9, 2015, exempted clothing purchases of up to $75 per item and school supplies and instructional materials of up to $20 per item from Ohio state sales tax. Purchases were not limited to families with schoolchildren, but were open to everyone shopping at Ohio stores.
The Economics Center reported that consumers saved about $3.3 million on $46.75 million worth of back-to-school purchases. Sales tax collections rose 9 percent over the tax holiday weekend, including items that were bought in addition to the back-to-school that were tax-exempt.
The State of Ohio collected an estimated $100 million in sales taxes over the weekend, and netted $4.7 million in additional tax revenue.
"We compared the actual retail sales data from August 2015 to what was forecast for that month and determined that sales were 6.48 percent higher than what our model predicted, indicating a gross increase of $8 million in sales tax collections," said Julie Heath, Alpaugh Professor of Economics and director of the Economics Center, in a statement.
And unlike what some people had predicted would happen, "we also determined that the sales tax holiday did not 'cannibalize' sales tax revenues from other months, as economic data shows July and September sales matched their regularly anticipated levels," Heath said.
The Economics Center offered its analysis of the tax holiday, but did not take a stand on extending it. "We are not a policy organization. The only thing we do is provide unbiased, quantitative analysis so other people can make those decisions," Heath said.
Focus on Ohio's Future sponsored the study, but did not do so with the expectation of a certain outcome. "If they had, we would have turned down the work," she said.
"We conduct completely unbiased research for a wide range of clients. As an affiliate of the University of Cincinnati, we are totally independent and don't try to tailor the outcome in any way," Heath said. If anything, its figures were on the conservative side, she added.
The Economics Center used data from the Ohio Department of Taxation and controlled for factors such as an improving labor market, falling gas prices, and higher disposable incomes that could have contributed to sales during that weekend. Only then did it compare actual sales to what they would have been without the holiday, she said.
The University of Cincinnati Economics Center study is posted online at FocusonOhiosfuture.com/published-research
Part of that additional sales tax revenue came from out-of-state consumers whose states didn't offer sales tax holidays. "Those Ohio counties that border other states experienced a 15.48 percent increase in their sales tax collections, compared to an increase of 4.56 percent in non-border counties," Heath said.
"Since no contiguous states have a similar sales tax holiday, Ohio is reaping the reward of being an 'early adopter' state, a benefit that might dissipate if neighboring states adopt their own tax holidays," Heath said.
"On the other hand, sales might increase in the future as the holiday takes on 'Black Friday' status as an event that families look forward to for savings each year."
Gordon Gough, president and chief executive of the Ohio Council of Retail Merchants, said: "These figures prove Ohio's sales tax holiday helped consumers enjoy lower taxes while boosting state and local government revenues. In short, increased revenue resulted from a reduction in taxes, not an increase."
"We look forward to working with the Ohio General Assembly to extend this valuable benefit to Ohio's families, taxpayers and economy," Gough said.
The Ohio Council of Retail Merchants, founded in 1922, is Ohio's oldest and largest advocate for the retail industry, and represents more than 6,400 retailers statewide. Ohio's retail industry accounts for $43.3 billion of Ohio's annual Gross Domestic Product and supports 1.5 million jobs, or 1 in 4 of all Ohio jobs, making it one of the state's largest industries.