Can offering tax free ENERGY STAR appliances increase the sales of ENERGY STAR appliances and ultimately make homes more energy efficient? Some states think so. Several States are offering “ENERGY STAR Sales Tax Holiday’s.” During this period, purchases of certain ENERGY STAR qualified products purchased for non-commercial use will be exempt from sales tax. Most of the items exempt from sales tax include ENERGY STAR dishwashers, clothes washers, refrigerators, air conditioners, ceiling fans, compact fluorescent light bulbs, and programmable thermostats that carry the Energy Star designation. The rules and regulations of each state vary as the program is a state and not a federal mandate.
As I research the answer to this question, I realized there is very little information out on the World Wide Web that discusses the benefits and downfalls to ENERGY STAR sales tax holidays. My first impression was “WOW several states are offering this specific tax holiday;” but then disappointment set-in. I could not find sales data or creditable articles that analyzed this type of tax program. After a good hour of researching, my assumption were confirmed, there is no good data or reports out on the web. In an incomplete white paper titled “Energy Star Incentives: Are they worth it?” the authors Souvik Datta and Sumeet Gulati looked at the impact of ENERGY STAR incentives and purchasing power, specifically utility company rebates and tax holidays on washers.
In the introduction of the paper Datta and Gulati talked about research that had been done on Hybrid vehicles and how the most recent studies shows state and local incentives having a positive effect on the sales of Hybrid vehicles. Interestingly enough, the authors then realized there has been little to no research done on ENERGY STAR incentives and consumer purchasing, even though both are labels placed on products that symbolize eco-friendly(easiest way to put it). While there is plenty of research done on how much energy is saved by purchasing ENERGY STAR products, there has been little done on consumer incentives.
After much tedious analysis the incomplete paper concluded that “the results were quite positive in terms of the overall impact of such incentives though they appear to be not so strong for the Green Sales Tax Holidays as compared to the rebates given by utility companies. It could be because of the nature of the Energy Star sales data that are quarterly and not daily as we would have liked them to be. We get better results for the utility rebates since they cover at least a quarter” (Datta and Gulati, 23).
While this report is still partially inclusive, due to the lack of opposing evidence available, I believe it’s safe to say that sales tax holidays and/or utility company rebates do have a positive impact on influencing home and business owners to purchase ENERGY STAR products. The question that has yet to be answered is how big is the impact? We should be comparing states that offer these types of incentives (especially tax holidays) to those states that don’t. We need to understand the impact of these incentives and what we can do to improve the purchasing the power of consumers.
Click here to read the white paper.