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Business

Promotions underway for sales tax holiday

Customers and employees stood near a promotional display at Jordan’s Furniture in Reading. Jordan’s is one local business offering sales tax holiday discounts before the tax-free weekend.

Josh Reynolds for The Boston Globe

Customers and employees stood near a promotional display at Jordan’s Furniture in Reading. Jordan’s is one local business offering sales tax holiday discounts before the tax-free weekend.

Two weeks before the state approved a sales tax holiday, Jordan’s Furniture began airing commercials touting an aggressive promotion to lure customers: Come in now and we’ll double the sales tax discount.

Now, with the weekend of tax-free shopping set for Aug. 10 and 11, a handful of other furniture stores have announced the same promotion. Rotmans in Worcester took it a step further, tripling the discount.

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“We did it, and within three days, everyone has done it, too,” said Eliot Tatelman, Jordan’s president and chief executive. “It’s a very competitive industry, and it’s perfect for sales tax holiday.”

These early promotions are a sign of the tax holiday’s popularity with shoppers and the importance of the late summer weekend to retailers, many of which say those are the best two days of sales during the year.

Electronics, department, and other stores will offer their own promotions to feed what has become an annual shopping frenzy.

The Retailers Association of Massachusetts, a trade group, estimates consumers spend more than $500 million in the state on a tax-free weekend.

Critics of the Massachusetts sales tax holiday cite the loss in tax revenue, estimated at $23 million in 2012, that it causes.

Aram Boghosian for The Boston Globe/File 2012

Critics of the Massachusetts sales tax holiday cite the loss in tax revenue, estimated at $23 million in 2012, that it causes.

“The customer feels pretty strongly that the sales tax is an irritant. They would rather not have it,” said Steve Rotman, president of Rotmans furniture store. “When the state approves a sales tax holiday, people voice that opinion by buying.”

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The Legislature on Tuesday approved the tax-free weekend and Governor Deval Patrick signed the bill into law Friday. It eliminates the 6.25 percent on purchases under $2,500, excluding utilities, cars, boats, and meals.

Critics question whether the holiday is worth the loss in tax revenue, estimated at about $23 million last year, for no real economic benefit. Studies have shown that tax holidays don’t generate additional consumer spending; customers merely shift purchases they would have made at another time to the tax holiday.

But retailers argue that extra staffing they put in place over the weekend produces additional income taxes for the state. The flood of shoppers also boosts sales at businesses such as restaurants, which still must collect taxes.

Jon Hurst, president of the Retailers Association of Massachusetts, said the holiday benefits retailers by retaining sales that would otherwise be lost to tax-free New Hampshire or the Internet.

He added that early promotions that attract customers to furniture stores before the tax holiday also add to state revenue, since sales tax is collected from these purchases.

One incentive for furniture businesses to extend the tax free discount is that it allows consumers to trickle in instead of bombarding the stores all at once.

“We take a lot of pride in the way we take care of consumers,” Tatelman said. “When the store is that busy on Saturday and Sunday, we absolutely don’t do our customers justice.”

Hurst said more retailers are willing to absorb the extra discounts to attract more customers amid a lackluster economy. US retail sales, excluding vehicles, climbed just 3 percent in the first six months of the year compared to the same time period a year ago, according to the Commerce Department.

“A lot of retailers are chasing after those somewhat limited consumer dollars,” said Hurst, “and consumers have so many different options today.”

Taryn Luna can be reached at taryn.luna@globe.com. Follow her on Twitter @tarynluna.

Correction: Because of inaccurate information provided to the Globe, an earlier version of this article incorrectly described a Jordan’s Furniture promotion. Jordan’s is offering a 12.5 percent discount on purchases through Friday.

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