Senate president: 'Stay tuned' on potential sales tax holiday this summer
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Senate President Stanley Rosenberg told businesses and shoppers "stay tuned" on potential for a sales tax holiday this summer.
After lawmakers last year opted against granting the two-day sales tax holiday that had become an August tradition, Senate President Stanley Rosenberg on Wednesday offered a non-committal message for businesses and shoppers waiting to see what this summer will bring: "Stay tuned."
Expecting fiscal 2017 tax revenues to fall below initial projections, legislative leaders said at the time they were unwilling to add to the shortfall by instituting the temporary break from the 6.25 percent sales tax. In previous years, lawmakers embraced the holiday as a way to boost sales and tax revenues.
The decision to eschew the tax holiday was made despite objections from retailers who said the event lets consumers save money while helping brick-and-mortar shops compete against their online counterparts.
"I think there were voodoo dolls with my head on them," Rosenberg said of the response during a radio appearance Wednesday.
A Retailers Association of Massachusetts survey found the lack of a sales tax holiday led to "dramatic drops in local sales and hours worked," with 86 percent of RAM members reporting lower sales in August 2016 than August 2015, and 75 percent reporting reductions in employee hours.
Asked on Boston Herald Radio what a Magic 8-Ball toy would say about the outlook of a sales tax holiday in 2017, Rosenberg said, "It would say, stay tuned."
He said state officials should direct their focus toward "getting the federal government to fix the internet sales tax," which is not collected on all online sales.
"A sales tax holiday would be a different discussion in the context of solving that problem, because the sales tax holiday costs 20 or 25 million," the Amherst Democrat said. "We're losing three to 400 million dollars on sales. That's a much bigger problem for Main Street and for the Legislature."
Gov. Charlie Baker's $40.5 billion fiscal 2018 budget proposal includes a plan to begin collecting sales tax from online retailers who do not have a physical location in Massachusetts but do more than $500,000 in sales in the Bay State annually. Administration officials said the move, made through changes to Department of Revenue regulations, is expected to yield $30 million in sales tax revenue next fiscal year.
House and Senate budget writers will develop their own spending plans after a series of public hearings, which are slated to begin March 9.
Rosenberg said rising costs for the MassHealth program make it a "tall order to add anything new to the budget, never mind to keep up with current costs." He said he believes the state has "a revenue problem" and called that stance a point of "respectful disagreement" with Baker and House Speaker Robert DeLeo.
Baker opposes broad-based tax hikes and DeLeo told reporters earlier this month that the House budget would not contain increases to the sales or income taxes. "Those aren't going to be part of the House budget," DeLeo said.
Representatives are free to offer tax-related amendments to the budget, but reps in recent years have closely followed leadership's stance on taxes.
Bills that change tax policy must originate in the House under the state's constitution.
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