Buyers beware: DiMasi says a tax holiday unlikely
Tax free. Those two sweet words, it appears, will not be heard at cash registers this August, the month when state politicians normally declare a two-day sales tax holiday and prompt a $500 million retail rush during the dog days of summer.
House Speaker Salvatore F. DiMasi told The Patriot Ledger on Thursday that the Legislature is likely to break its four-year-old summer tradition as it scours for revenue for the new state budget in a tough economy.
“At this particular time, it is very, very unlikely that we will have a sales tax holiday,” DiMasi said.
Skipping the holiday would be a blow to retailers, especially those selling electronics, home appliances, furniture and other big-ticket items.
First passed in 2004, the holiday lifts the state’s 5 percent sales tax on most products with a price tag of up to $2,500, putting savings as high as $175.
Jon Hurst, president of the Retailers Association of Massachusetts, said foregoing the holiday would be a “huge disappointment” to store owners, many of whom relish holiday season level sales.
“I know times are tough, tax revenues are down, but we would argue this costs the state nothing,” Hurst said. “Consumers need this; Main Street needs this.”
Leading up to last year’s tax holiday, officials estimated the state would miss out on $30 million to $50 million in tax revenue over the Aug. 11-12 weekend.
But Hurst said those figures ignore additional income taxes paid by the shops and a larger-than-usual work force on the busy weekends. He also said hungry shoppers drive up restaurant sales and argued the weekend breeds a “consumer momentum” that carries into the back-to-school shopping season.
Hurst said his membership will lobby lawmakers for their support in passing the tax holiday.
“With millions of dollars in incentives being given to the film industry and billions to biotech (firms), the least we can do is help struggling consumers and Main Street Massachusetts,” he said.
Lawmakers on Beacon Hill are debating a $28 billion budget that relies on a blend of tax increases, spending cuts and depleted savings to close a budget gap of $1.3 billion.
Passage of the sales-tax holiday requires yearly approval from the House and Senate and the governor’s signature.
At Best Buy in Braintree, shoppers gave mixed reactions to the possibility of an August with no tax holiday.
Sandra Miller, a tax accountant from Quincy, said she advises clients as well as her students at Suffolk University to time larger purchases for that weekend.
But Ajay Manocha of Braintree said the tax-free incentive doesn’t lure him on a shopping spree.
“Five percent is not a big deal,” he said.
John P. Kelly may be reached at firstname.lastname@example.org.