If the leader of Republicans in the Iowa Senate gets his way, Iowans would get two full days of "sales tax freedom" this August. Ron Wieck of Sioux City is calling for an expansion of the annual sales tax holiday, which has typically allowed people to buy tax-free clothing and footwear as part of back to school promotion.
Wieck says this year the break should also include things like furniture and televisions – as a way to stimulate the economy. "My thought is this, if you look at the timing of when we believe we’ll get the refunds from the federal government that’s pretty close to the time when we do the sales tax holiday. The important piece of trying to do something for an economic stimulus is to get people to go out and spend the money," Wieck said.
The Iowa Department of Revenue predicts that would save Iowans more than ten-million dollars. But majority Democrats, including Iowa City Senator Joe Bolkcom, say they’d rather provide targeted tax relief to low income Iowans. "With giving a sales tax exemption across the board like that, it provides maybe some greater benefit to more luxury items than the kind of average expenditures consumers make on school clothes and school supplies and I just think it’s kind of a gimmick," Bolkcom said.
Wieck says it’s simply a way to compliment the proposed federal rebate checks expected to arrive late summer. "If we get the money coming back and people don’t get it back into the system, we accomplish nothing," Wieck explained. Wieck wants to couple the sales tax holiday with a $200 million dollar income tax cut that would run through the end of the year.
But Bolkcom says it reminds him of the 1997 income tax cut which he says took million of dollars out of the state budget but didn’t make much of a difference to Iowans. Bolkcom stated, "It amounted to a Big Mac a week per Iowan." Bolkcom says using that money to raise teacher pay and keep college tuition affordable is a much better way to revitalize Iowa’s economy.