Herald staff and wire reports

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For parents and students throughout North Carolina, today's the day. The first of a three-day break from paying sales tax on the basics needed for school - and more.

North Carolina retailers hope this weekend's annual sales tax holiday will breathe life into the state's slumping economy, as shoppers are expected to save an estimated $9.2 million in taxes they would otherwise pay.

The tax-free holiday lasts through Sunday. “I think this is a small thank you for our taxpayers and I think, all in all, it's earned its keep,” supporter Sen. John Kerr, D-Wayne said.

Over the seven-year life span of the annual holiday, the state has missed out on perhaps as much as $60 million in revenue, according to estimates from the fiscal analysts at the legislature.

The holiday lifts the 6.75 percent sales tax charged in most counties on a host of back-to-school items, including clothing under $100, some sports equipment, computers and desk supplies. Wedding apparel purchases, diapers, winter clothing and bathing suits are also covered.

The state charges 4.25 percent and most counties charge 2.5 in local sales and use tax. The state doesn't have an estimate for revenue lost by counties through the sales tax holiday.

Some North Carolina retailers will extend their hours and host sales for the weekend event.

N.C. Retail Merchants Association lobbyist Andy Ellen said it may serve as a much-needed boost for slumping sales.

“It's a big deal this year especially because the economy as a whole has been slow,” Ellen said.

Lawmakers pushed for the holiday at the height of a state budget crunch as a way to help consumers who were being asked to pay higher taxes and fees. The annual event was timed to coincide with a similar holiday in South Carolina which had driven some residents across the border in search of savings.

Other Southeastern states with sales tax holidays on the same weekend include Georgia, Alabama, Louisiana, Tennessee and Virginia.

But while politicians may score points with constituents for the holiday, temporary tax relief doesn't amount to much help in the long run, said Roy Cordato, an economist with the conservative John Locke Foundation.

“It's a gimmick,” Cordato said. “They should be reducing the sales tax across the board all year 'round.”

He added, however, that the reprieve does help parents - including himself - who are able to time their purchases to coincide with the weekend.

And Ellen said many shoppers drop dollars in the state's coffers over the holiday weekend by stopping at mall food courts or seeing movies during their shopping trips.

The program's estimated fiscal impact is “a drop” compared to the state's overall $21.4 billion budget, Kerr said.

“We do so much for the big corporations that come in,” said Kerr, referring to tax breaks and exemptions for businesses. “At least this is something for our people in North Carolina.”

The popularity of the August holiday may have factored into lawmakers' decision this year to create a second sales tax holiday for many big-ticket energy efficient products. Over the first weekend in November, taxes will be lifted on a host of Energy Star appliances - including air conditioners, refrigerators, washers and dryers.

Lawmakers approved the measure, originally proposed by Gov. Mike Easley, as a way to reduce energy consumption by encouraging consumers to purchase pricier but more efficient appliances.