NEWBURYPORT NEWS: Sales tax holiday gains traction on Beacon Hill

The Newburyport News reports on Representative Brad Hill's efforts to reinstate a sales tax holiday in August 2018.

Lawmakers seek two-day reprieve from sales tax

by Christian Wade

Shoppers could soon see a break from the state’s sales tax, with Beacon Hill leaders pushing to reinstate a two-day tax holiday as early as this summer.

House Speaker Robert DeLeo, D-Winthrop, signaled in a Twitter post over the weekend his plans to call a vote before the July 31 end of formal legislative sessions on a reprieve from the 6.25 percent tax.

DeLeo didn’t specify how it would happen but House lawmakers have tacked several amendments creating an Aug 11-12 tax holiday onto an economic development bill that is teed up for a vote Tuesday.

Two weeks ago, lawmakers reached an agreement with retailers to create a permanent sales tax holiday in August and eliminate a requirement that retailers pay workers time and a half on Sundays and holidays in exchange for dropping a ballot question seeking to lower the sales tax to 5 percent.

But the so-called “grand bargain,” most of which would go into effect next year, didn’t require a sales tax holiday this year.

“It’s good for retailers and Main Street merchants but it’s also good for consumers and the economy,” said Jon Hurst, president of the Massachusetts Retailers Association, which suggests that sales before and after the tax-free weekend will help the state recoup some of the nearly $20 million in tax revenue it will lose.

Retailers view tax holidays as an opportunity to lure shoppers during a slow season and level the playing ground with online retailers, which have generally avoided paying the state’s sales tax. Many consumers use the weekend to stock up on school supplies or more expensive goods.

The holiday is particularly important for communities along the New Hampshire border that compete year-round with stores in the tax-free Granite State.

But the holiday, held in 12 of the last 15 years, has been on hold for the past two years amid concerns about the state’s fiscal stability.

If lawmakers agree on a plan, not everything would be tax-free. The holiday won’t include big-ticket items, such as cars and boats, or single items costing more than $2,500. Nor would it include taxes on energy bills, restaurant meals, tobacco or marijuana products.

There’s no state sales tax on groceries or clothing costing less than $175.

Massachusetts has one of the highest sales taxes in New England, which retailers say puts them at a competitive disadvantage.

Rhode Island has the highest in the region at 7 percent followed by Connecticut’s 6.35 percent.

Gov. Charlie Baker, a Republican seeking a second term, has sought to create a permanent tax holiday to buoy brick-and-mortar retailers.

Republican lawmakers have floated similar proposals but Democrats who control the Legislature have declined to take them up, citing budget shortfalls.

Earlier this year, Baker tacked a proposal to create an annual sales tax holiday onto a sweeping $610 million economic development bill. A final version the bill, which emerged from the House Ways & Means Committee on Monday, didn’t include a tax holiday.

But House Republicans filed one of two amendments to include a holiday, which is expected to be taken up Tuesday.

“With state tax revenues coming in much stronger than anticipated, there’s really no reason not to do this now,” said Rep. Brad Hill, R-Ipswich, who co-filed the amendment with House Minority Leader Brad Jones, R-North Reading. “This is important relief for retailers and consumers, especially those along the New Hampshire border.”