Briefing: Sales Tax Holiday
Massachusetts lawmakers have once again approved a sales tax holiday weekend this year. On Aug. 13 and 14, shoppers won’t have to pay the state’s 6.25-percent sales tax on any item that costs up to $2,500.
What’s the history of the tax holiday?
The first Massachusetts sales tax holiday was held on a Saturday in 2004. The next year, it was expanded to a full weekend. Since then the tax-free weekend has been approved every year except 2009.
What benefit does the tax holiday have?
Retailers testifying before a legislative committee this year argued that the holiday provides a sort of economic stimulus by driving up their sales.
They said its costs to the state are offset because it means increased payroll taxes and because it encourages shoppers to buy gas and meals, which aren’t tax-free. However, Gov. Deval Patrick said the holiday isn’t “particularly fiscally prudent.” He said he supports it simply because it’s popular.
Who’s opposed to the holiday?
Some organizations, including The Public Policy Institute/ONE Massachusetts, oppose the tax holiday as a blow to worthwhile state programs that could be funded with the tax money. Opponents also say the holiday simply causes consumers to shift the timing of purchases they would have made anyway.
What will the holiday cost the state?
Patrick said the holiday means forgoing between $20 million and $25 million in taxes. There have been questions this year about whether the state can afford that lost revenue, since the fiscal 2012 budget involved some major cuts to state service. But increases in tax collections in recent months have led lawmakers to see the move as feasible.
Wasn’t there talk of a meals tax holiday earlier this year?
Yes. The Massachusetts Restaurant Association was pushing the idea of creating a holiday from the state meals tax, similar to the sales tax holiday, in March. A number of legislators got behind the plan, but it didn’t end up going anywhere.
Related Links:
Massachusetts Restaurant Association
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