Louisiana’s annual sales tax holiday begins at 12:01 a.m., Friday, Aug. 6, 2010 and local retailers are vamping up for the holiday.

Most retail purchases made from 12:01 a.m., Aug. 6 through midnight Saturday, Aug. 7 will be exempt from the 4 percent state sales tax. State officials remind shoppers that local taxes collected by parishes, towns and other taxing entities still apply. For example, instead of paying 9.5 percent sales taxes, residents would pay 5.5 percent.

The exemption does have a few qualifiers. The holiday only applies to first $2,500 of the cost of most items that are for business use.

According to the state’s revenue department, the Act makes specific mentioning of vehicles and meals as exclusions from the holiday. Besides those, the sales tax holiday doesn’t apply to purchases of taxable services––i.e. hotel occupancy; amusement, recreation and athletic admissions; repair to tangible personal property; laundry, cleaning, pressing and dyeing services; vehicle parking; the furnishing of cold storage space; printing services; and telecommunication services––or the leasing or renting of tangible personal property.

The state law requires all retailers participate by offering the tax exemption at the time of the sale. Furthermore, there is a $25 tax credit to help offset costs of reprogramming their cash registers available to retailers.

State director of the National Federation of Independent Business, Renee Baker, believes the annual tax holiday can work to aid small businesses still feeling the effects of the economic recession.

“Sales tax holidays are great for families trying to stretch a dollar, but they’re also great for small businesses,” Baker said. “They get people excited and in the mood to shop, and that’s exactly what our economy needs right now. We think this year’s sales tax holiday will really help businesses along the Gulf Coast who have been hurt by the drop in spending since the Deepwater Horizon disaster this spring.

Small businesses make up about 98 percent of all employers in Louisiana, according to the U.S. Small Business Administration. Their statistics also show that about 54 percent of the state’s private sector of the workforce are employed by small businesses. Based on these statistics, small businesses indeed do stand to receive a boost from this year’s tax break.

“The bottom line is that the more we can increase consumer spending at our small businesses, the more jobs we save, and the faster our economy will recover,” added Baker.

Those shopping for back-to-school items this year are reminded to keep their receipts. They will serve as documentation for the Louisiana School Tuition and Expense Tax Deduction, which applies to 50 percent of eligible expenses and up to $5,000 per student. More information on this tax deduction can be found at www.revenue.louisiana.gov/schooldeduction.

The state law dictates that the holiday be held on the first consecutive Friday and Saturday of every August.

For more information on the holiday, visit www.revenue.louisiana.gov/taxholiday.