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Pared-down tax holiday bill jumps first hurdle

A bill that would give families a sales tax break on some school-related purchases got 11-1 support Wednesday from the House Finance Committee, but only after it was significantly watered down.

The proposal, House Bill 14-1094, is this year’s version of an idea that’s been floated in the legislature more than once but never drawn enough support to make it into the law books.

“This is a bill for Colorado consumers and Colorado families,” said sponsor Rep. Dan Pabon, D-Denver. As amended, the bill would exempt some school-related purchases from the state’s 2.9 percent sales tax for three days during the first weekend of next August.

The holiday would apply to school supplies up to $50 in price and to clothing costing up to $75. At the request of Pabon, the committee removed a section that would have applied the holiday to sports equipment and also eliminated the original five-year term of the bill.

The hearing rehashed familiar arguments.

The retail industry loves the idea. “This will the next Black Friday,” predicted Chris Howes of the Colorado Retail Council. He also suggested that any loss in sales tax revenue on school supplies would be more than made up from taxes on other purchases made during the holiday weekend as shoppers flocked to stores.

But George Awuor of the Bell Policy Center and Ali Michelson of the Colorado Fiscal Institute warned that such gains might be an illusion because consumers merely would spend money during the tax holiday instead of during other times of the year.

Legislative fiscal analysts estimate the bill could cost the state $3.1 million in revenue, but they didn’t consider the possibility of offsetting revenue gains.

Eighteen other states have similar sales tax holidays.

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