Cover Story: Tax-Free Holiday - What it costs

CHARLOTTE, NC (WBTV) - It's definitely going be a busy weekend of shopping in the Carolinas.

Tax-free weekend is underway on both sides of the state line and the stores are getting ready for the rush.

It can mean big savings for you.  But it's costing the states a bundle.  These savings come at a big price.

The sales tax holiday seems like a win-win:  Great for you and great for retailers but is it really so great for the economy and your government?

They were screaming it out on billboards when it began 11 years ago:  "Tax Free Shopping in South Carolina."

And the governor at the time was talking it up.

"South Carolina is at the forefront of tax relief here," said Gov. Jim Hodges in August 2000.

It wasn't two years later North Carolina was on the bandwagon to the delight of shoppers and retailers.

Stores like Tootsies Too kids shoes in Myers Park say the tax-free weekends boost the bottom line.

"We've sold more already today than we did the same Friday last year. So it's good. Yeah," said Nonie McVicker.

But the money you save is money your government isn't getting.

"I would say probably postpone the program for the short term and evaluate it."

North Carolina state senator Richard Stevens of Wake county is one of the ones saying in tight times like these (remember at one point the state was $3.2 billion dollars in the hole) we may need to re-think tax-free weekend.

"What does it mean for the economy of the state versus what does it mean for the loss of revenue? And if it's more loss of revenue than gain we ought not to continue the program," said Stevens.

Critics say while it's a good "feel good" - who doesn't want a break from paying taxes - there's no evidence the tax-free holiday gets more people to buy.

They're going to buy back-to-school stuff anyway.  It only changes when they buy.

And it's a losing proposition for the states.

North Carolina stands to lose $14.5 million in uncollected sales tax this weekend.  South Carolina state officials say they will lose $3 million.

Nineteen states and the District of Columbia have tax free holidays.  But some like Georgia and Illinois had it and dropped it.  Florida canceled and then brought it back in a scaled-down version.

Back at Tootsies Too the jury's still out on the tax-free weekend.

They're glad it's here.  And wouldn't want it to go.  But undecided on the cost vs. benefits.

Said Nonie McVicker, "We're going to sell school shoes whether they have tax free or not. Does it help spur it on? Sure. We know to have two people here today and tomorrow. We actually have three coming for tomorrow.. yeah we know it's going to be big. But it would probably be just as big.  May not all be in one day. But we're going to sell the same amount."

And there will be a lot of sales going on.  An estimated $250 million or more will be spent by North Carolinians from Friday through Sunday during the tax-free weekend.

Back-to-school sales is the second-biggest shopping event in the country after Christmas.

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