The annual Hurricane Preparedness Sales Tax Holiday typically held the last weekend of May is this year’s latest casualty to Louisiana’s budget crunch – and more crunching may be coming.
Area retailers expressed concern over losing business that has historically come with the sales tax holidays, particularly the state’s “annual sales tax holiday” in August that could be substantially reduced.
Charlie Hartman, owner of Hartman’s True Value Hardware in Boutte, said loss of the hurricane tax break and even reduced annual sales tax holiday (last year a 9 percent tax break representing 4 percent state tax and 5 percent of parish tax both forgiven on tangible personal property) will definitely hurt his sales and could signal cutbacks at this business.
“It’s going to hurt big time,” Hartman said. “I don’t look forward to moving as much equipment this year as I did in past years.”
Hartman, along with Brian Tobin, owner of Anthony’s Ace Hardware in Destrehan, both agree the tax holidays are proven business boosters and especially for their small businesses.
“We’ll be watching real close and we’ll probably have to do cutbacks,” Hartman said. “The first thing that business looks at is labor. If push comes to shove, we’re going to be cutting back on employees. That’s the biggest expense I have.”
Tobin doesn’t anticipate layoffs, but cutting work hours is a possibility.
He projected a 25 percent hit in sales this weekend, which he called “devastating” to a business constantly trying to grow.
Paula Haydel-Jeansonne, director of the St. Charles Parish Sales Tax Division, said this year’s hurricane tax holiday was not approved. The tax break applied to preparedness items like generators, batteries and canned food that are bought in anticipation of the hurricane season that begins June 1.
It died in the 2016 First Extraordinary Session of the Louisiana Legislature, but will partially return in 2017 and 2018 at 3 percent instead of 5 percent.
The state Department of Revenue also announced the August general tax holiday is expected to be held, but at a lower rate – 3 percent down from 5 percent last year – for fiscal years 2016 through 2018. It will then return to the full 5 percent rate.
Haydel-Jeansonne said Tuesday that she hasn’t heard from the parish’s tax board yet on whether it will reduce or again provide the local tax break on this tax holiday this year.Hartman maintained these two tax holidays along with the state’s Second Amendment sales tax holiday, which is scheduled Sept. 3 – 5 on items including firearms, ammunition and hunting supplies, have all driven major sales for his business.
Weekend sales with a tax holiday could equal an entire month of sales at the hardware store, he said.
Also, Tobin said a lower tax break could be even more hurtful because it won’t be enough to sway major sales at the same time businesses still incur the cost of reporting the tax.
“I don’t think that will cause people to get out and buy the high-dollar items,” he said. “I don’t see people as motivated.”
Hartman and Tobin both say no or low sales tax breaks will especially hurt small businesses.
“By taking away [tax] breaks, they’re cutting retailers’ throats,” Tobin said. He added this comes at the same time the state increased sales tax and wants to raise minimum wage.
Hartman further questioned the fairness and timing of making hurricane preparedness items less affordable in a state that deals with storms.
“This will be 11 years from Hurricane Katrina – we got to be prepared. Our luck will run out sooner or later,” he said. “These people could end up a burden on the state if we have a storm.”
“That simple phrase ‘tax free’ makes people buy,” he said. “Now they’re going to cause people to not be prepared for an event that will cost us more money in the long run.”