Fri, Jul 18 2008

Published: July 28, 2006 09:38 am    PrintThis  

Tax-free border battle:Weekend huge for Mass., a blip for N.H.

By Gordon Fraser
Eagle-Tribune

The possibility of another weekend-long Massachusetts sales tax holiday doesn't faze New Hampshire or its retailers - not in the least.

But some in the Bay State think they should pay a little more attention.

"New Hampshire is tax free 365 days a year," said Victoria Cimino, spokeswoman for the New Hampshire Division of Travel and Tourism. "We always try to encourage people not to stress out to get all their tax-free shopping done in a couple of days."

This week, the Massachusetts Legislature has been hammering out a bill to give the Bay State's retailers - and, through them, consumers - some weekend-long relief from the state's 5 percent sales tax. It isn't a new idea. The Legislature passed similar bills in 2004 and 2005.

The current bill hasn't yet been signed by Gov. Mitt Romney.

But while Massachusetts reported banner sales during its last tax-free weekend - only the Saturday before Christmas was more successful, according to one agency - New Hampshire experts say the weekend goes virtually unnoticed in the Granite State.

"There might be a momentary blip (in New Hampshire's sales), but we're tax free all the time," said Nancy Kyle, president of the Retail Merchants Association of New Hampshire.

Although some Massachusetts residents likely wait until the weekend of Aug. 12 and 13 to buy big-ticket items, Kyle said, shoppers will continue to cross the border into New Hampshire. And even if Massachusetts sees an uptick in sales, she said, it isn't because New Hampshire residents are crossing into Massachusetts to enjoy a privilege they could enjoy by staying home.

But Bill Rennie, director for public affairs at the Retailers Association of Massachusetts, tells a slightly different story.

"We compete with neighboring states for consumer spending dollars," Rennie said. "This sales tax holiday, coupled with different promotions, make it even more appealing (to out-of-state shoppers)."

He said vacationing consumers from Rhode Island, Connecticut and, yes, even New Hampshire spend a small fortune during the Massachusetts tax holiday. Last year, sales in that holiday weekend topped $500 million.

Only the Saturday before Christmas, which saw sales in excess of $600 million across the Bay State last year, is bigger for stores.

On an average weekend, Massachusetts retailers see about $120 million in sales, he said.

Because one-third of all purchases are impulse buys, Rennie said, tourists visiting Boston and other areas are more likely to spend during the tax-holiday weekend, especially because some south-of-the-border shops offer products that one doesn't see farther north.

But Rennie acknowledged that Bay State retailers struggle to beat New Hampshire stores in the retail border war.

And Kyle, of the New Hampshire Retail Merchants Association, can agree with that, mostly.

"I don't think there's any border war at all. I mean, we have the obvious advantage," she said.

Kyle and Cimino said larger concerns about whether the tax holiday could affect New Hampshire businesses long term are unfounded.

Both said New Hampshire businesses depend on out-of-state shoppers. "If you look at where all our retail density is, it's all along the borders," Kyle said. A single weekend of cheap shopping won't do much to change the status quo.

In fact, Cimino said, a tax holiday can only draw attention to the nearly year-round taxation in Massachusetts. She thinks, ultimately, the holiday will encourage more people to shop in New Hampshire.

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