MassLive reports on the Massachusetts House of Representatives' decision to approve a proposed tax holiday in August 2018.
by Shira Schoenberg
Massachusetts consumers may get a sales tax holiday this August.
House lawmakers on Tuesday took the first step toward approving a 2018 sales tax holiday on the weekend of Aug. 11-12, adding an amendment establishing the holiday to an economic development bill.
"A sales tax holiday is something for one weekend that's 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," said Rep. Jeffrey Roy, D-Franklin, who introduced the amendment.
A law signed by Gov. Charlie Baker in June will establish a permanent sales tax holiday weekend each year in August, beginning in 2019. But the new law is silent on 2018, leaving that decision to the Legislature.
In the past, lawmakers have suspended the annual reprieve of the 6.25 percent tax in years when revenue was low. The sales tax holiday costs the state around $20 million a year.
This year, state revenues are actually up from what was predicted. As of May, 11 months into the 2018 fiscal year, revenue collections were $879 million above expectations. The state expects to deposit around $525 million into the rainy day fund once the books are closed on the fiscal year.
The House voted 124-18 to add the sales tax amendment to the economic development bill, which lawmakers plan to vote on Tuesday.
"For retailers, it's an opportunity to bring shoppers in during a slow season," Roy said.
Retailers favor the annual holiday as a way to level the playing field with online retailers and with stores in neighboring New Hampshire, which does not charge a sales tax.
Rep. Brad Hill, R-Ipswich, said small stores on the New Hampshire border are going out of business because people choose to shop in New Hampshire to avoid paying the sales tax. "We're asking for two days out of a very slow time of the summer to help our mom and pop stores," Hill said.
Rep. Jay Kaufman, D-Lexington, chairman of the Revenue Committee, spoke out against the sales tax holiday. Kaufman argued that a sales tax holiday shifts purchases to that weekend, but does not generate additional sales. Stores need to add personnel for the weekend, and they lose sales before and after the holiday.
"The sales tax weekend may look good and may give us something that we can go home to constituents and say we gave them, but it doesn't really change the purchase patterns of most consumers," Kaufman said.
Kaufman said the loss in state revenue translates into a loss of services.
Once the bill passes the House, it will go to the Senate for consideration.