Retailers, shoppers gear up for Arkansas’ tax free weekend

Retailers from Wal-Mart to local boutiques expect a busy weekend as Arkansas shoppers take advantage of the state-sponsored tax holidays beginning Aug. 2 and running through Aug. 3. 

Shoppers may purchase clothing up to $100 per item, unlimited school and art supplies and up to $50 in clothing accessories and pay no state or local sales tax on those purchases, a savings of nearly 10% in Northwest Arkansas and the Fort Smith metropolitan area.

Electronics purchases are not part of the tax free program but Wal-Mart announced Thursday (July 31) that it will unveil price roll-backs in-store and online for top electronics and other college dorm room essentials. Wal-Mart said its rollbacks and special buys are timed to the start of sales tax holidays in select states and at a time that data shows a spike in customers shopping online for back-to-school items. 

“The combination of families stocking up on school supplies, college students shopping for electronics and select state sales tax holidays makes this one of the busiest times of the year for us,” said Steve Bratspies, executive vice president, general merchandise for Walmart U.S. “We know that customers are searching for ways to save as they prepare for the fall. That’s why we’re making it easier for them to get back to class for less with great deals available on Walmart.com and in our stores.”

Sales tax holidays are a big part of the back-to-school season for many families in Arkansas – for some, it can mean enough savings to purchase extra an shirt or a backpack, Wal-Mart noted.

“We’re prepared for this busy time with the items that matter most this season like supplies and back-to-school clothing,” the retailer said in a statement.

Wal-Mart said the products in biggest demand and the most well-stocked include: 
• 24-count Crayola Crayons;
• Elmer’s School Glue; 
• binders; and
• notebooks and notebook paper. 

The retailer said big trends for 2014 include items featuring characters from Disney’s Frozen and Captain America: The Winter Soldier. 

It’s not the just large retailers who can benefit from tax-free weekends, according to the National Federation of Independent Businesses. Retailers of all sizes should leverage these one-day or weekend shopping events with sales, coupons and more, according to Andy Ellen a spokesman for the organization.

"When the tax holiday is offered, it drives a lot of foot traffic, both for the items that are tax-free that weekend as well as taxable items," Ellen said. 

Sixteen states are offing tax holidays in 2014, according to Diane L. Yetter, president of Chicago tax-consultancy firm YETTER. 

Not everyone is excited about the sales tax holiday as some groups cite a loss of state revenue.

“The primary reason Arkansas began offering the tax-free weekend was because consumers living near border states were believed to be shopping in those states that offered the tax free savings. Now retailers in state don’t lose out to neighboring Oklahoma, Texas and Missouri,” said Kathy Deck, director for the Center for Economic Research at the University of Arkansas.

She said the state-sponsored holiday does promote walk-in traffic for retailers and it helps to coordinate when consumers shop for the covered back-to-school items given they have the means to purchase them during the stated weekend.

Deck said it is not clear how much tax revenue the state looses annually from the one weekend of tax free incentive. But when she factors in that Arkansas consumers are shopping more in-state, Deck said that is money that at one time was flowing elsewhere.

“Two things are likely, consumers might spend a little more than they normally would because they are getting more for their money without paying taxes. There is also the fact that they are shopping during a promotional period which could mean they buy items that had not planned,” Deck said.

Economist Liz Malm of the Tax Foundation, notes that sales tax holidays do not promote economic growth or significantly increase consumer purchases. She sad the evidence shows that they simply shift the timing of purchases. Some retailers raise prices during the holiday, reducing consumer savings.

The Arkansas Department of Finance shows the complete rules for the state-sponsored tax-free purchases on its website.