JUL. 7, 2015 • BY JON HURST

As the calendar moves past Independence Day weekend and the state budget gets finalized, the question is now being asked by stores and consumers alike on whether Massachusetts will enjoy a weekend of tax-free shopping this August. If authorized, a 2015 Sales Tax Holiday would be the eleventh in the last twelve years. Stores and Main Streets would be packed with consumers enjoying both the 6.25% tax savings on items up to $2,500, along with the sale prices many stores would be offering.

Starting with the first “Sales Tax Holiday” held in 2004, shoppers have embraced this late summer event providing Massachusetts Main Street retailers, and the state’s economy, with a much needed economic boost at an otherwise very slow time. Eighteen states normally authorize sales tax holidays, but none as successful as the Massachusetts event. And with the incredible growth of smartphone/mobile commerce just over the last couple of years, this state incentive is becoming even more important to keep hundreds of millions of dollars in our state rather than lose sales to tax-free internet sellers. While virtually all of our elected leaders agree that the sales tax holiday is good politics, some question if it is good policy. Here’s why it is:

Consumers Vote With Their Dollars: Past sales tax holidays have created a December-like weekend in what would normally be empty stores and Main Streets. And a May, 2015, poll by Opinion Dynamics showed that 72% would be Very Likely or Somewhat Likely to shop locally instead of in New Hampshire or on the Internet if the Legislature and Governor re-authorize future sales tax holidays. The consumer represents 70% of our economy, and consumer spending has a multiplier effect that determines whether new jobs and investment will be made by wide variety of employer sectors. The Sales Tax Holiday is truly an economic stimulus of the most effective form.

Keeps Vital MA Dollars and Jobs in MA: What makes the state incentive work is that it gives our consumers a strong reason to shop locally rather than to drive to NH or to shop tax free sites on their smartphones. A June, 2015 study by the Beacon Hill Institute at Suffolk University found that the sales tax holiday generates an average of $168 million in Massachusetts sales which would otherwise go to NH or the Internet. The study also concluded that the holiday increases Massachusetts employment by an average of 627 jobs; creates an average of $50 million in new investment; and increases real disposable income by an average of $37 million. With tax-free New Hampshire to the north and the Internet at their fingertips, many consumers continue to spend their money outside the Commonwealth. Most of the dollars spent during these tax-free weekends wouldn’t have otherwise occurred locally, but rather would have gone to retailers in other states boosting their economies. The Sales Tax Holiday keeps hundreds of millions of sales, investment, and income dollars, as well as jobs right here in Massachusetts.

Benefits Low-Income Earners: The sales tax is inherently regressive and disproportionately hits low-income families. Those on the lower end of the economic ladder can’t access tax-free shopping like middle and upper income families do. Driving to New Hampshire or shopping online isn’t possible for many because they don’t have a car, or Internet access, or the credit cards necessary to make online purchases. The Sales Tax Holiday does help makes our tax laws a bit less regressive for many families during the challenging back to school shopping season.

Helps Small Businesses: The state and federal tax code is full of permanent tax breaks and subsidies for big, multi-national corporations. Retailers are primarily family-owned, small businesses. They occupy the storefronts on Main Streets in our towns, and sponsor our Little League teams. They don’t have stores in New Hampshire, or tax free websites. The Sales Tax Holiday is the only tax break they and their customers are likely to get in any given year.

The Massachusetts Sales Tax Holiday is a proven economic stimulus that helps Main Street, retail employees, and most importantly our consumers. On behalf of the Massachusetts retail community, we urge the Legislature and Governor Baker to authorize this economic incentive for this August. Consumers want to support their local stores and their neighbors working on Main Street, and the Sales Tax Holiday gives them the reason to do just that.

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