August 12, 2014
By Senator Richard J. Ross
As has become Massachusetts’ custom over the past 10 years, a tax holiday was declared for the 16th and 17th of August of this year. During this weekend, the standard sales tax of 6.25% will be suspended for sales less than $2,500, alleviating added burdens to our hardworking taxpayers.
Since its inception in 2004, the holiday has been widely supported by both consumers and merchants. Despite the regular occurrence and statewide support of the tax free weekend, there was recently debate in the state legislature regarding when the sales tax holiday should take place. Many constituents reached out to my office directly expressing their confusion and concern. Business owners struggling to advertise, consumers trying to plan their budget, and although the question was eventually worked out in conference committee, it did cause doubt about when or even if the holiday would be held.
Implemented as part of a stimulus package designed to help grow the economy back in 2004, the holiday has been a yearly event ever since, with the exception of 2009. The holiday weekend gets people in stores and encourages them to make purchases they may have been holding off on, assisting local businesses during the summer months, and ultimately promoting economic growth in the Commonwealth.
The advantages of the holiday are not just limited to the one weekend. Many stores offer sales where consumers can come in before the appointed weekend, make a purchase, and receive a discount equal to the sales tax. Of course, the state still receives this sales tax, meaning everyone benefits from the tax free weekend even before it happens, whether it is the consumer, store owner, or the state.
As New Hampshire does not impose a sales tax, it is very tempting for consumers to often make the journey north rather than buy at home, impacting local businesses. However, the sales tax holiday keeps consumers in Massachusetts and even attracts residents from neighboring states. Of the five states that border Massachusetts, only Connecticut and New York have a regular sales tax holiday, and their holidays only apply to clothing. Given the wider range of products to be purchased in state tax free, as well as the proximity of these five states, it is more than likely that a large number of the consumers on tax free weekend will have come from out of state.
Unfortunately, the delay in setting a specific date for the sales tax weekend has greatly undermined the purpose of the holiday. Because stores have not had a specific weekend to promote, they have been forced to be unclear in advertisements, leading to uncertainty with consumers. The ensuing confusion could result in many residents failing to properly take advantage of the holiday, undercutting its primary purpose.
One possible solution is to formally make the sales tax holiday an annual event, a proposal that I have supported over the past several years. Making the tax holiday an annual occurrence would allow stores to plan far ahead and prepare for the sale with proper advertising and enough employees to accommodate the huge influx of customers. However, this measure has already been rejected by the House, making it unlikely to happen in the near future. The other possible solution to this uncertainty would be to settle the date months in advance, providing stores the time they need to advertise and the public the notice they deserve to be able to plan accordingly.
For many in Massachusetts, the tax free weekend has become a standard custom. It is an event that people look forward to and take advantage of every year. By postponing the decision of which specific weekend to use for the holiday, the power and effectiveness of the holiday was potentially hurt, undermining the attempt to stimulate our economy. I strongly urge my colleagues in the legislature to take a closer look when this comes to a vote once again next year and reevaluate the impact this holiday has on our constituents. The time for debate is over; we owe it to our taxpayers.