Editorial: Retailers, shoppers deserve tax holiday this year

  •   

Published: 7/18/2018 11:57:46 PM

Many tax experts argue that sales tax holidays don’t really boost annual retail shopping overall, but simply shift the spending from one time of the year to another.

Local retailers over the years have been ambivalent about the tax-free days, some seeing it as an effective economic development tool that does add to their bottom line, others contending the tax holiday sales are not worth the extra time and energy it costs small businesses.

But there’s no denying that tax-free days have been popular among shoppers in Massachusetts, one of the nation’s high tax states that abuts sales-tax-free New Hampshire.

So, it’s probably not surprising that the Massachusetts House of Representatives approved an amendment to an economic development bill that would establish Aug. 11 and 12 as a sales-tax-free weekend this year. The state has not had the tax holiday the last two years.

“The sales tax holiday is something for one weekend that is good for retailers, it’s good for Main Street merchants, it’s good for consumers, it’s good for constituents and it’s great for the Massachusetts economy,” Rep. Jeffrey Roy, D-Franklin, who sponsored the amendment, said on the House floor.

The amendment calls for the 6.25 percent sales tax to be frozen for two days on most items that cost less than $2,500. The tax holiday would not apply to tobacco, marijuana, gas, electricity, cars, boats or meals.

That still leaves room for lots of lawn mowers, yard tools, grills, refrigerators, stoves, and other appliances to be sold.

The House voted 124-18 to adopt the amendment, with progressive Democrats voting in opposition.

Rep. Jay Kaufman, chairman of the Joint Committee on Revenue, opposed the amendment because of what he called the “mythology” that tax holidays generate business and help all retailers. The holiday shifts the timing of consumer spending and hurts small businesses that have to pay to have additional employees working that weekend, he said.

Jared Walczak, a senior policy analyst at the Washington-based Tax Foundation, has said that sales tax holidays aren’t typically an effective way to stimulate a state’s economy.

“Individuals aren’t substantially changing their overall purchasing patterns,” Walczak told the Boston Globe. “They’re shifting them within a window (of time). It’s really just a gimmick.”

Last year, 16 states had some form of a sales tax holiday, Walczak said. They’ve been declining modestly since peaking during the mid-2000s.

But Roy and other House backers of the tax holiday brush aside this analysis, saying the tax break is popular among consumers and that this summer is a good time to hold a sales tax holiday weekend because the state has collected more in tax revenue than it was expecting — to the tune of about $1.2 billion, according to the Department of Revenue. The tax holiday is expected to cost about $25 million in uncollected tax revenue.

Massachusetts had a one-day tax holiday in 2004, and full weekend holidays from 2005 through 2015 with one exception: Legislators paused the celebration in 2009 when the state faced a massive budget crunch. In the last two years, there have also been fiscal woes, so there was no sales tax holiday in 2016 and 2017.

The Senate must also agree if there is to be a sales tax holiday this summer, and it must be signed into law by Gov. Charlie Baker. While Baker supports the holiday, it’s unclear where the state Senate stands.

A spokeswoman for Sen. Karen E. Spilka, who has claimed the votes to be the next Senate president and chairs the Joint Committee on Ways and Means, said she is “taking a look at it and discussing with her colleagues.”

We urge the Senate to follow the House’s lead and approve the holiday for this August. Whether senators believe such holidays boost overall retail sales or simply shift the spending seems moot, as the Legislature and governor already have permanently reinstated the August tax holiday starting in 2019, as part of a compromise over proposed ballot questions.

It seems the decision has been made that the state will have an annual tax holiday. The only question now is whether the holiday starts this year or next. Why not give consumers an extra holiday to celebrate this summer?




Daily Hampshire Gazette Office

115 Conz Street
Northampton, MA 01061
413-584-5000

 

Copyright © 2019 by H.S. Gere & Sons, Inc.
Terms & Conditions - Privacy Policy