Proposed sales tax holidays on school supplies and certain appliances could deliver increased tax revenue, says Sen. Rick Gudex.
“People who are inclined to go out and buy items on that particular weekend may be inclined to buy other things that are taxable,” the Fond du Lac Republican told “UpFront with Mike Gousha,” produced in partnership with WisPolitics.com .
Gudex said over the weekend he’s confident his tax holidays will gain sufficient support ahead of the upcoming legislative session. Under Gudex’s proposal, the first weekend in August would see a suspension of taxes on school-related supplies, including computers and apparel.
During a November tax holiday, purchases of energy efficient appliances and winterization materials would be tax-free. Merchants are supportive of the idea because sales in the first weekend of November are typically slow, according to Gudex.
“The impetus behind this stems from the fact that we are seeing excess sales tax revenue,” said Gudex. “When we start to see that kind of revenue come in, we start to think of ways we can help people in the state of Wisconsin.”
— Wisconsin Bankers Association President and CEO Rose Oswald Poels, also a guest on the program, said new mortgage lending rules could make it difficult for borrowers with a history of debt or without steady income to obtain a loan.
Under the new rule, Poels said banks must separate loans into two categories: qualified mortgages and non-qualified mortgages. Qualified mortgages can only be extended to consumers with a debt-to-income ratio of 43 percent or lower.
“For consumers this could be very detrimental, particularly for those who are self-employed, heavily sales commissioned or farmers,” said Poels.
Banks that offer non-qualified mortgages may be open to litigation and regulatory risks, according to Poels. She said borrowers over the 43 percent debt-to-income ratio make up between 7 and 12 percent of the current loan portfolios of banks around the state.
Poels said Wisconsin has a “diverse, strong banking industry” and encouraged consumers to shop around for banks that will offer non-qualified mortgages.
“We’ve always under-written very conservatively,” said Poels. “To be forced to remove subjectivity, the character out of the five C’s of credit, from our decision making is really going to restrict our ability to make loans to all the borrowers that we’ve been able to make up to this point.”