Joplin, Missouri destroyed by tornado May 2011; Sales tax revenues up by October 2011

In a recent CNHI News Service Original report in the Effingham Daily News, it was reported that “the tornado that leveled much of Joplin

[Missouri] has created a whirlwind of business activity that has produced a significant jump in sales tax collections.

When disasters are imminent, many states will legislate allowing a sales tax holiday on specific disaster related items. In May, 2010, Virginia Governor Bob McDonnell recognized a week in May as “Hurricane and Flooding Preparedness Week to emphasize the importance of emergency preparation.” Likewise, each year, Florida has offered a temporary period of respite from sales taxes on emergency hurricane preparation items such as flashlights, portable, self-powered light sources, portable radios, tarps, fuel containers, batteries and portable generators.

According to a July 2011 Tax Foundation report, “sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of the purchases.” Then there is the concern that “some retailers raise prices during the holiday, reducing consumer savings.”

But it was not the pre-tornado purchases that boosted the local Target increase in sales. According to the executive team leader at Target, Ethan Giertz, “We did see significant sales after the tornado, and it has continued all the way through.” The sales taxes collected helped Joplin end the budget year with nearly $1 million more than their projected collections. Funds from the 1-cent sales tax that goes into the general fund totaled about $12.3 million; projections were for $11.3 million for the year.