Governor, Assembly Republicans agree to sales tax holiday and child tax rebate

Assembly Republicans and Governor Walker have struck a deal on a proposal to provide taxpayers with a one-time tax credit of $100 per child and a one-time sales tax holiday for purchases of $100 or less. This agreement replaces an earlier plan proposed by the governor to create an ongoing, annual child tax credit.

While Republicans who firmly control the state Assembly are on board, the future of the proposal in the GOP-controlled state Senate, however, is uncertain.

According to Senate Majority Leader Scott Fitzgerald (R-Juneau), it’s unclear whether Senate Republicans will support it.  Fitzgerald said he will discuss the proposal with his members Tuesday.

Democratic leaders, meanwhile, are dismissing the proposal as “an election-year gimmick.”

According to news reports, the deal calls for parents to receive a one-time $100 per child tax credit for every child under 18 living at home, regardless of family income, refunded by check in July.  It also calls for a sales tax holiday on the first weekend of August for purchases under $100.

Speaking to the media, Assembly Speaker Robin Vos (R-Rochester, pictured at right) provided details on the child tax credit.  He said parents would go online, enter their child’s social security number and the checks would be mailed to them in July. Parents would also have the option to receive the money via direct deposit or to donate the amount to charity instead of receiving the money.

The sales tax holiday would be set for Aug. 4 and 5.  All consumers would be exempt from paying the state’s 5 percent sales tax on all retail items in stores that cost $100 or less.  More expensive items would be taxed at the normal 5 percent rate.   A press release by Gov. Walker indicates the sales tax holiday would not apply to the sale of taxable services, prepared food, motor vehicles, motor vehicle parts, tangible or intangible property used to access telecommunications services, tangible or intangible property provided by a utility, or alcohol and tobacco products.

Gov. Walker had proposed a slightly different sales tax holiday targeted toward specific school-related and electronic goods purchases last February in his proposed 2017-19 state budget, but those provisions were removed from the budget bill by the Legislature.

The proposal is estimated to cost roughly $172 million over the current biennium, which would draw down almost half of a projected $385 million state budget surplus.

In his State of the State address, Gov. Walker had called for a $100 per child tax credit that would be paid out through a tax rebate check this year and then come through the normal income tax return process every year thereafter.

That tax credit would have been refundable, meaning even families without an income tax liability would have been eligible to receive the credit, and those without children would not have been eligible. A number of Republican lawmakers had expressed concern about that plan, prompting the revisions.