Proposed: Sales tax holiday for Wisconsin this summer

Should Wisconsin offer a sales tax holiday all summer? A proposal working its way through the legislature would do that at certain businesses.

The pitch right now is to turn off the sales tax from June through the end of August at amusement parks, arcades, restaurants, bars, and brewpubs. 

Gar Nelson

Gar Nelson

"We would be able to hold on to a little bit more of the piece of the puzzle, to be able to make sure that this year, we’re able to offset some of the losses that we saw last year," said Gar Nelson, co-owner of The Garcade.

At The Garcade, the sales tax savings would be about 80 cents for $15 all-you-can-play. For a party of ten, $325, you would save $18.

Tax experts face off on the tax-free play.

"This three month’s long sales tax holiday, it’s not going to change behavior significantly. People are eager to make these purchases. If it’s safe to do so, they’ll be out at restaurants and theaters and so on," said Dylan Grundman O’Neill, Senior State Policy Analyst for the Institute on Taxation and Economic Policy.

"I think you’re going to have, assuming we time this right, an absolute gusher of economic activity in this sector," said Ryan Ellis of the Center for a Free Economy. "So if the sales tax holiday is sort of the tipping point reason why someone decides that they’re going to go out to eat that night, they’re not just going to eat that night. They’re also going to go and do some other things."

Ryan Ellis

Ryan Ellis

Conservative Ryan Ellis compares it to a coupon or sale -- and said it is needed after a year of staying home. 

"In order to get people out of that mentality, you have to give them some sort of a perceived hook. It’s marketing more than it is tax policy," Ellis said. "It is a buy one, get one free kind of gimmick to get people out the door and get them using these underutilized sectors of the economy."

Progressive Dylan Grundman O'Neill said more bang for the buck will come from increasing the child or earned income tax credit -- or providing direct grants to businesses.

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Dylan Grundman O'Neill

Dylan Grundman O'Neill

"It looks very much like this is going to be very dispersed throughout the economy in ways that are not going to particularly help the businesses that struggle during the pandemic, the families that struggled during the pandemic," Grundman O'Neill said.

The Wisconsin Assembly passed the proposal. Now, it bounces over to the Senate. Gov. Tony Evers has not said if it will be game over on his desk.

Wisconsin's Department of Revenue estimates the proposal would lead to $160 million less in income for the state -- and roughly $13 million less for counties. 

The Wisconsin Dells Visitor and Convention Bureau opposes the holiday in part because of the loss of income for local governments, while The Tavern League says it's a desperately-needed economic shot in the arm.

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