Retailers push for sales tax ballot question
PHOTOS/GRANT WELKER
The Retailers Association of Massachusetts is pushing for a ballot question that would lower the state's sales tax.
The Retailers Association of Massachusetts on Thursday waded deeper into its exploration of a possible ballot question in 2018 to lower the state's sales tax, releasing an online survey intended to test the appetite of Bay State merchants for a campaign that could begin almost immediately.
The board of the retailers association has authorized its staff to conduct member, legal and voter research and "engage in opinion leader discussions" about the possibility of pursuing a ballot initiative.
And they'll have to act fast. Aug. 2 is the deadline for petitioners to submit language and at least 10 signatures from registered voters to the attorney general for review for possible placement of initiative petitions on the 2018 ballot.
The Retailers Association of Massachusetts board voted just before Memorial Day to ramp up its vetting process, which will include a member survey as well as additional public polling, according to RAM President Jon Hurst.
"They're getting more serious, but wanted us to do more due diligence," Hurst told the News Service Thursday afternoon.
A sales tax reduction ballot question would potentially more than reverse the sales tax increase that House Speaker Robert DeLeo helped lead in 2009, when the rate was raised from 5 to 6.25 percent. As more sales are conducted tax-free online, retailers have grown frustrated, warning elected officials that communities anchored by stores and shops are at risk and pleading with Beacon Hill each year for tax relief provided by a brief sales tax holiday.
The survey put into the field on Thursday and reviewed by the News Service seeks to gauge the level of interest among retailers in a sales tax reductions, measure the impact of competition from online sellers and solicit feedback on what a new sales tax rate should be.
It also asks association members how much money they might be willing to contribute to a campaign to lower the sales tax, which would likely be fought by online retailers and interest groups worried about a loss in state revenue impacting other types of services.
The choices presented to the RAM members in the survey include leaving the sales tax rate alone, lowering it to 5 percent, to 4.5 percent, to 4 percent, lower than 4 percent or a total repeal that would put Massachusetts on par with neighboring New Hampshire.
"I think we are really trying to figure out what do our members feel like they need in order to recover sales from these non-taxed competitors. There's a lot of anger here," Hurst said.
The more aggressive testing of the waters on a ballot question comes after Revenue Commissioner Michael Heffernan on Wednesday revoked a directive that would have required online retailers that do at least $500,000 in sales in Massachusetts annually to collect and remit the state sales tax starting July 1.
Bay State brick-and-mortar sellers have for years complained about being on unequal footing with out-of-state and online-only retailers who peddle their wares via smartphones and computers, but legal precedent requiring stores to have physical presence in a state before government can require sales tax collections has so far proved an insurmountable hurdle.
The Baker administration still believes it has legal standing to go after online sales taxes, but will now pursue the change through a lengthier regulatory process in the face of threats from online sellers of a lawsuit.
"Even if the reg works, it's going to trigger more litigation that's going to take years, up to the Supreme Court. There's a whole lot of frustration about whether Beacon Hill and other opinion leaders are really serious about saving Main Street and saving retailer jobs and having fairness for consumers," Hurst said.
One factor in RAM's calculation about whether to pursue a sales tax cut at the ballot will be the fact that voters, barring a successful legal challenge, will also be asked in 2018 to decide whether taxpayers should pay a 4 percent surtax on all income over $1 million.
Hurst noted that the collision of the two questions on the ballot could resurrect a debate started in 2013 by former Gov. Deval Patrick when the Democrat proposed a comprehensive tax code overhaul that included an increase in the income tax to 6.25 percent and decrease in the sales tax to 4.5 percent.
Patrick argued that the recalibration of the tax code would result in a more progressive system that didn't disproportionately fall on low-income families, but the proposal went nowhere in the Legislature.
"Maybe it's time that we really revisit more seriously such a tax reform," Hurst
RAM said in its member survey that consumer spending accounts for 70 percent of the Massachusetts economy, and yet competition from online retailers and neighbor states like New Hampshire, where there is no sales tax, drives sales away from Massachusetts businesses.
Hurst said a decision on whether to submit an initial petition likely will come "within the week before" the Aug. 2 deadline to submit signatures.
A MassINC Polling Group survey of voters released this week found 62 percent support for a hypothetical ballot question to lower the sales tax from 6.25 percent to 4.5 percent.
A poll commissioned by RAM in November found that 79 percent of those respondents said they support reducing the sales tax to about 4 percent or 4.5 percent to make the tax system fairer and to support local retailers. In the same poll, 66 percent said they believe the "proper sales tax range" for Massachusetts would between 4 percent and 4.5 percent.
Gov. Charlie Baker in 2010 supported rolling the state sales tax rate back to 5 percent, but when asked in March about a potential 2018 ballot question he said, "That one has a long way to go before it ends up coming before the voters and if it does, obviously, we'll talk about it then, but I did support back in 2010 the idea of reducing the sales tax from 6.2 to five and there's no question that retailers in Massachusetts face tremendous competition and pressure from our colleagues north of the border who don't have a sales tax at all."
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