Tax-free weekend is an essential economic driver
W. Stuart Loosemore
The Worcester Regional Chamber of Commerce understands the state budget is challenged this year just like it was in a recession-plagued 2009, the last time the tax-free holiday weekend was not adopted by the Massachusetts legislature. Even though it is not happening this year, there are compelling reasons to preserve this vital economic tool for years to come.
The tax-free holiday weekend offers significant, positive financial impacts for countless small businesses, as customers are more prone to shopping when they don't have to pay the 6.25-percent sales tax on purchases up to $2,500. Last year, the Retailers Association of Massachusetts published survey results estimating the economic benefit of having a tax-free weekend to be roughly $168 million. For many retailers, the sudden rush of consumer spending, during traditionally their slowest sales season, makes a substantial contribution to their economic survival.
Consider the multiplier effect carried over to restaurants, and other retailers of non-consumer goods, who also realize increased sales and activity. The tax-free holiday weekend allows our members – like Rotmans Furniture and Flooring Center or Percy's TV & Appliance – to compete on a more level playing field with states like tax-free New Hampshire and big box stores from out of state who, thanks to a loophole, process transactions via the internet allowing them to forego charging sales tax.
A tax-free holiday weekend is a win-win for businesses and residents as it keeps money in local communities. It encourages residents to shop locally with retailers in their community who are known and respected.
Local businesses, both big and small, are the backbone of the community. Many local organizations and worthy causes count on their support year-round, and time and again, those local businesses are there to lend their support. Drive by a little league field or attend a charity event, and you will find the names and logos of many local businesses – like Rotmans and Percy's, among others - adorning the outfield wall or program booklet. While the lack of a tax-free weekend will not likely cause local businesses to stop giving their support, without the economic boon and the activity associated with a tax-free weekend, that support might be a challenge to come by.
While we are mindful of the financial constraints facing the commonwealth, we strongly contend that the loss in tax revenues during the tax-free weekend is largely outweighed by the economic activity generated. We respectfully ask lawmakers to keep local retailers in mind, should the financial picture brighten. The chamber, and our retail members, look forward to the inclusion of a tax-free weekend during next year's fiscal debate and review.
The tax-free holiday is a proven economic stimulus. A healthy retail economy helps to mitigate the hit to the state budget in lost sales tax revenue, while its benefits are long-term and wide-reaching. In an era when more financial and regulatory hurdles are placed in front of small businesses, the tax-free weekend not only provides a financial benefit but also shows these companies that the state values and appreciates their contributions to the community.
W. Stuart Loosemore is the general counsel and director of government affairs and public policy for the Worcester Regional Chamber of Commerce.
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