A provision in Gov. Scott Walker’s state budget proposal meant to reduce the cost of back-to-school supplies could subsidize your next Xbox or PlayStation purchase.
Walker’s 2017-19 budget includes a sales tax holiday that would apply to certain TVs, cell phones and video game consoles, according to the Legislative Fiscal Bureau.
However, a top-ranking member of the Joint Finance Committee said Friday the budget language will be changed to exempt those items.
The holiday also wouldn’t take effect until 2018, the fiscal bureau reported. Walker proposed a holiday that would be in effect in both 2017 and 2018.
Walker proposed exempting from the state’s 5 percent sales tax for a two-day holiday over the first weekend of August 2017 and 2018: clothing up to $75, school supplies each up to $75, school computers up to $250 and personal computers up to $750.
The Walker administration expected the reduction in state tax revenues to be $11 million a year.
If all 2.3 million households in Wisconsin took advantage of the sales tax holiday, that would come out to $5 per household, according to the fiscal bureau. If only the 630,382 households with children took advantage, they would save $17 each.
The fiscal bureau noted Walker’s bill doesn’t define computers, which in state law includes products that have a computer chip, including certain TVs, cell phones and video game consoles. For a $500 video game console, the state sales tax and savings would be $25.
If those items are included, the total annual cost of the proposal jumps to $17.3 million a year, according to the Department of Revenue.
Rep. Dale Kooyenga, R-Brookfield, said “that will definitely be fixed.”
“That is 100 percent certain that if there is a sales tax holiday, the definition will be tailored to computers that students can purchase,” Kooyenga said.
A spokesman for Walker said the governor “would not object to modifications to his original proposal to ensure it meets his original budgeted amount knowing that it would still cover essential school supplies.”
The department calculated the number for a separate sales tax holiday bill introduced this year by Sen. Dan Feyen, R-Fond du Lac, and Rep. Nancy Vander Meer, R-Tomah. The bill was not passed by May 1, which was the deadline for the holiday to take effect in August 2017.
The two-year cost of the proposal as it stands would be less than Walker proposed because it would not take effect in time for the sales tax holiday to occur in 2017, as originally advertised. So rather than costing $22 million over the 2017-19 biennium, as Walker projected, the proposal would cost $17.3 million.
The fiscal bureau noted the bill could be modified to refine the definition of personal computers to exclude TVs, cell phones and video game consoles. The Republican leaders of the Joint Finance Committee did not respond to a request for comment on whether they plan to alter the proposal.
Proponents of a sales tax holiday say it can stimulate the economy, while opponents disagree, saying it only shifts the timing of purchases.
Last year, 17 states had sales tax holidays on items such as clothing and footwear, school supplies, computers and energy efficiency products. The fiscal bureau noted while the holiday might be targeted at parents buying school supplies, others are equally able to take advantage of the discount.
The fiscal bureau suggested there are other more targeted methods of delivering tax relief to parents for the same amount, including increasing the personal income tax exemption for dependents from $700 to $840 or boosting the earned income tax credit for low- and middle-income families by 10.7 percent.