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Sales tax holiday begins in Iowa

Posted: 5:05 PM, Aug 03, 2018
Updated: 2018-08-03 22:28:23Z

While school supplies and other big money items are exempt from the holiday, shoppers were filling their carts with plenty of clothes and other everyday items to catch that seven percent discount. 

Cheri Garrison first thought the sales tax holiday was gimmick so stores could get customers through the doors while raising prices, this year she finally realized, it's a real discount. 

"I need to save money, these are grandbabies here, so I need to save I need to stretch my money and it's well worth it, I'm so glad I came out here," says customer Cheri Garrison.

Garrison was one of many customers that came out as early as 10 a.m. this morning in Council Bluffs to shop without the seven percent sales tax.

These tax-free holidays are still a debate among experts. But Tej Adidam, marketing department chair at UNO, thinks it's a net positive.

"Because it's an event, every time you go and have more and more families coming together in these retail establishments such as shopping malls and shopping centers and big box stores, it creates a sense of community especially in those medium to small size towns," Adidam said. 

The naysayers believe that stores really don't make more money, instead folks hold on to their money throughout the summer waiting for the tax-free weekend. 

"What some researchers have found is what is called a sales shifting, for what they would have normally bought in June or July they're just shifting it to this weekend," says Adidam. 

Retail stores say the holiday is a boon for them, with Anita Hart, general manager at JC Penney, saying their customer base doubles this weekend. 

"This is one of the busiest days for the back to school season. We get a lot of out of town traffic coming in at this time, and a lot of locals too and people coming from Omaha," says Hart.

Most of the items tax-free are clothes and shoes. Adidam hopes Iowa eventually expands it to school supplies. 

"I think that is where Iowa is missing, they should actually expand it to those other things. That would be a genuine benefit to that specific segment they're trying to help," says Adidam. 

Now for those Nebraskans coming across the river to shop, the Nebraska Department of Revenue does say that customers still owe taxes on these items and that they should pay them when they file their income taxes.