CEO of Tech Advisors in Medfield; Medway resident
Governor Charlie Baker’s proposal for a two-month sales tax holiday this year might be just what the doctor ordered.
Massachusetts typically offers a two-day holiday in which purchases by individuals of most retail items up to $2,500 are exempted from the 6.25 percent sales tax. There are some persuasive arguments to expand it this year to two months.
Topping the list is the obvious one: We are coming out of a time in our history unlike any other.
The financial hardship that has befallen retail businesses is unthinkable. Many businesses closed their doors; others had to downsize their operations; and because of COVID restrictions many consumers turned to online shopping for their purchases. All these factors hurt the retail and hospitality sectors significantly. While government programs helped businesses keep employees on the payroll, that assistance was not geared toward bringing people back into stores.
A longer tax-free period may be the impetus to get people used to shopping in person again, and provide merchants much-needed foot traffic.
I was a CPA for many years before launching our IT firm. Through my current work with CPA client firms and membership in the Massachusetts Society of CPAs, I have a good window into the trends in the accounting field and the overall state of the economy.
The extended sales-tax holiday would be a strong economic stimulus addressing two problems we are still struggling to fix: getting consumers used to shopping in person, and giving our businesses a strong competitive advantage.
Anyone who has ever traveled to New Hampshire has probably experienced the ribbing some Granite Staters like to direct at Massachusetts for offering only two sales tax-free days a year when they have 365.
Recent state figures show Massachusetts tax revenues are nearly 15 percent above the year-to-date projection. The “Rainy Day Fund” is also expected to reach $4.4 million, higher than before the health crisis.
This suggests that the state is in good financial shape. So why not help our merchants and consumers at the same time?
A far from ordinary year deserves a far from ordinary solution. And if it works, maybe we could consider it for future years.
State senator, Acton Democrat
As Massachusetts moves past the end of the state of emergency, it’s clear that COVID-19 has had a devastating impact on our communities that will require bold government action to not just return us to normalcy, but improve our society for the long term. Governor Baker’s proposed two-month sales tax holiday is a political gimmick that will not achieve these goals, and provide little relief to working families, while costing the state about $900 million that could otherwise fund needed investments in our cities and towns.
Sales tax breaks, including the sales tax holiday, are bad tax policy. They provide little financial relief to those who really need it, instead primarily benefiting those who can afford to spend the most. Sales tax breaks end up lining the pockets of big-box stores, while mom-and-pop stores generally receive a modest sales benefit. State government should focus on furthering sustained investments in transportation, childcare, affordable housing, public health, the social safety net, and climate resiliency efforts.
Many communities are approving affordable housing, but the waiting period to receive critical state funding for these projects is often many years. The discovery of toxic chemicals known as PFAS in water systems across Massachusetts is requiring communities to expand treatment, but the state’s Clean Water Trust is unable to keep pace with the need for funding. School buildings are so antiquated that during the pandemic it was deemed dangerous to return kids to classrooms because of poor ventilation. Millions of Massachusetts residents found relaxation visiting our outdoor public spaces, but many of these areas are deteriorated from decades of disinvestment.
Investing $900 million in infrastructure projects would be a significant step toward meeting those needs, and improving public health, quality of life, and opportunities for state residents. Spending that money on a tax break is a superficial gesture to Massachusetts working families at a time of rising costs of living, overwhelming student and credit card debt, and poor access to child care.
Beacon Hill must not fall into this political feel-good trap. The Legislature should reject Governor Baker’s sales tax proposal, and begin listening to our constituents to determine the most prudent uses of taxpayers’ dollars.
As told to Globe correspondent John Laidler. To suggest a topic, please contact firstname.lastname@example.org.
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