BOSTON - With one legislative committee already on board, the popular, annual sales tax holiday weekend bill appears on track for advancement.
This year's bill would create two tax-free days the weekend of Aug. 11 and Aug. 12, exempting a wide variety of products from the state's 6.25 percent sales tax. The bill is limited to retail sales, and does not include purchases of motor vehicles and boats, cell phones or items that cost more than $2,500.
"Ours is one of the shortest holidays, however it's also one of the broadest. It covers virtually everything," said Jon Hurst, president of the Retailers Association of Massachusetts. "We hope that the Legislature and the governor support it again this year."
The bill also has the support of House Speaker Robert DeLeo. "The speaker's been supportive of it in the past, and if it can be done again, he'd like that to happen," said DeLeo's spokesman, Seth Gitell.
Last year, Gov. Deval Patrick called the holiday "popular" but not necessarily "prudent" but nevertheless signed the bill on Aug. 1, two weeks ahead of the tax holiday. The nearly annual sales tax holiday began in 2004, but skipped a year in 2009 when in the midst of falling revenues the state raised the sales tax and turned down the tax holiday.
Proponents of the bill have successfully passed it six of the seven times it has come up since 2004, but every year the debate is rehashed because lawmakers have opted against making the holiday permanent. Though he is a supporter of the holiday, Hurst said he understood the strategy of not to making the holiday an automatically recurring event because consumers might postpone all of their major purchases until mid-August.
"On the one hand it would be nice to have it annually planned and automatic but I understand the thought process of keeping it a year-by-year decision to see how the budget revenues are doing," said Hurst, though he claimed the holiday is revenue-neutral for the state because it spurs lots of taxable spending, including outlays on meals and the payroll taxes for employees brought in to handle the rush.
Opponents of the bill had argued in 2009 that it was unwise to offer a sales tax holiday when the state is in fiscal crisis. Rep. Jay Kaufman (D-Lexington) called the holiday "a gimmick" at the time.
Hurst said that retailers will often offer a 6.25 percent discount on big ticket items that are over the $2,500 cap, thereby mimicking the sales tax holiday while also allowing the state to collect taxes on those expensive purchases.