One cost of running a tax holiday on guns

Rifles are for sale at a gun shop. (DOMINICK REUTER/AFP/Getty Images)

By Meg Wagner

Like a back-to-school sale, but for guns

Tennessee is considering giving shoppers a chance to buy guns tax-free — but the money consumers save could cost the state a small fortune.

State representative Dennis Powers filed a bill on Wednesday that would make the first weekend in September a “Second Amendment sales tax holiday,” waving the state’s 7 percent sales tax on shotguns, pistols and even BB guns. Ammunition would also be sold without tax for the weekend.

The tax-free gun weekend would be similar to Tennessee’s July back-to-school shopping holiday, when shoppers can buy certain clothing items and school supplies without sales taxes.

If the bill becomes law, Tennessee would become the third state to offer a gun tax holiday. Louisiana and Mississippi have given their guns-shoppers an annual tax break for years, and Texas and Arkansas are mulling over proposals introduced in January.

While proponents of the tax holidays talk up how they help local businesses by encouraging consumers to buy guns and ammunition, it also means the state would lose out on a weekend’s worth of taxes — which could mean hundreds of thousands, or even millions, in lost revenue.

Where gun shoppers get tax breaks

Louisiana started its gun tax holiday over the Labor Day holiday in 2009, shaving its 5 percent sales tax off gun and ammunition sales for the weekend — the first state in the U.S. to offer such a deal.

But that policy was walked-back for the 2016 and upcoming 2017 Labor Day weekends: Instead of getting firearms completely tax free, shoppers now pay a 3 percent sales tax.

The compromise came after lawmakers tried to kill all the state’s tax holidays — including both the gun weekend and the back-to-school shopping weekend. The tax-free shopping occasions were too expensive for the state, they argued, and Louisiana would add $4.3 million to its annual revenue if it removed them. About $600,000 of that would have come from squashing the gun holiday.

Mississippi’s had its tax-free gun weekend since 2013, saving shoppers the state’s 7 percent sales tax. The break has remained untouched since it was introduced.

In 2015, a Texas lawmaker tried to get the state its own sales tax break for firearms, arguing that Texas was losing money because gun buyers would flock to Louisiana to shop during its holiday weekend.

While Texas’s Senate approved the plan to temporarily remove the state’s 6.25 percent sales tax, the bill died in the House after legislative analysis showed it would cost the state $6.6 million in tax revenue over two years.

Texas apparently was not deterred by the defeated 2015 bill: a new, nearly identical bill was filed in January that would create a tax holiday for gun shoppers. It must again pass in the Senate and then make it through the House to become law.

Arkansas shoppers could also get a tax-free gun weekend this year. In January, a state lawmaker introduced a plan to make a “Second Amendment Appreciation Weekend,” which would drop the state’s 6.5 percent sales tax on the same weekend as its largest gun show.

More states looking to go tax-free

Retailers that sell firearms insist that they see massive sales during the tax-free weekends.

When Louisiana was considering nixing its tax holiday on firearms, one sporting goods store owner said the no-tax weekend accounted for 80 percent of his September business. In South Carolina — which started an annual firearms tax holiday in 2008, only to cancel it in 2011 — gun dealers said that one tax-free day saw the same amount of sales as an entire week of normal, taxed shopping.

While it’s impossible to know just how many guns are sold over any state’s tax-free weekend, gun sales can be tracked through background checks processed by the National Instant Criminal Background Check System, a necessary step to buying a gun. However, the agency produces monthly, not daily, reports by state.

Both states with tax-free gun weekends saw slight upticks in the number of background checks run during the months of their holidays in 2016.

In Louisiana, there were 33,656 checks in September 2016, compared to 30,716 a month before and 32,820 a month after. However, the sale month shows significantly less than the 51,493 checks processed in the holiday shopping month of December. Mississippi’s tax-free weekend month of August saw 26,351 checks, while there were 21,907 in July and 19,705 in September. December, again, was the most popular month to buy a gun, with 36,091 checks.

Both current gun tax holidays and proposed bills to establish them are limited to southern states, the region with notably high firearm death rates.

In 2015, Louisiana ranked No. 2 and Mississippi came in at No. 4 in the nation for firearm deaths, according to data from the Centers for Disease Control and Prevention (Alaska and Alabama ranked No. 1 and No. 3 respectively). A year earlier, Louisiana was No. 1 and Mississippi was No. 3, while Alaska ranked No. 2.