Furniture stores, rug purveyors, lighting shops, and other retailers around Massachusetts are pushing big (even “Huge!”) promotions for the state sales tax holiday.
The problem? There isn’t a sales tax holiday this year.
Lawmakers at the last minute decided to eliminate the August ritual, amid slower than expected state revenue growth. But retailers, who have advertised the event for weeks, have forged ahead on their own, offering discounts equivalent to double, triple, even quadruple the state’s 6.25 percent sales tax.
“Triple tax relief event!”
“SAVE 4X THE SALES TAX!”
Consumers can still save; the money, however, will come out of the pockets of businesses, not state coffers.
“The customer is used to having this. Some have been planning a purchase for a long time,” said Lindsay Cathers, a marketing manager for Michigan-based La-Z-Boy. “We thought let’s just keep business moving and not disrupt anything.”
The state sales tax holiday has been a late-summer tradition nearly every year since 2004, when Governor Mitt Romney said he was “sending taxes in Massachusetts on a little summer vacation.” It was skipped just once, in 2009, amid recession rockiness.
But with state tax collections coming up short this year, and concerns on Beacon Hill about future retail tax collections, the Legislature scrapped the August weekend event, electing to instead keep the estimated $26 million in forgone revenue.
Retailers criticized the decision as shortsighted in an era when consumers are increasingly shopping online, making it harder to get them in the door of brick-and-mortar stores.
“No one likes taxes; it hits a bunch of nerves” for shoppers, said Ani Collum, a partner and analyst at the Norwell firm Retail Concepts. “So retailers are trying to leverage that feeling this year.”
On air and online, merchants, many of them in the fiercely competitive world of furniture sales, are trying to outdo each other, whipping would-be customers into a shopping frenzy with the promise of promotions that last days or weeks, instead of the traditional two-day tax holiday.
Why furniture retailers?
In part because they benefit from the fact that previous holidays set fairly high $2,500 ceilings on purchases.
That meant many big-ticket items qualified in Massachusetts, unlike in other states, such as Ohio, where similar tax holidays were limited to clothing or school supplies.
But even without a state-mandated holiday, the leveraging has been exhaustive and widespread, from Jordan’s Furniture advertisements offering deals weeks ago to Tennessee-based Tractor Supply Co. promoting a special “Tax Discount Weekend Program” in Massachusetts.
Part of the issue, said Jon Cahill, marketing director for Landry & Arcari Rugs and Carpeting, is that the Legislature waited until the eleventh hour to eliminate the weekend bonanza, forcing retailers to go ahead with advertising without knowing whether the state would sanction a holiday this year.
“There wasn’t a lot of time,” Cahill said, but there was much at stake. “It’s our biggest one-weekend sale of the year. It’s huge for us.”
Jordan’s furniture ads, featuring proprietor Eliot Tatelman, initially touted what would “most likely” be a tax holiday earlier this summer, tweaking the ads after the Legislature rejected it to promote a “double tax holiday,” as it has done for years.
Tatelman declined to discuss the decision.
Rotman’s, a stand-alone furniture warehouse store in Worcester, has sweetened its “double tax free” deal this year by throwing in free delivery to places such as Boston and Cape Cod and extending the sale through the month of August.
But chief executive Bernie Rotman predicted that without the state’s endorsement and related media coverage, sales would probably slip this year.
“To be honest, I don’t think it’s going to equal what it would be otherwise,” he said.
Without a state-mandated holiday, some retailers adopted a different approach.
Instead of the usual sales tax holiday discounts, Bernie & Phyl’s Furniture opted to tap into election-season excitement. This week it unveiled an advertising campaign announcing it would refund the purchase price for items bought Aug. 8-22 if voter turnout is more than 75 percent in the Nov. 8 presidential election.
Larry Rubin, chief executive, said the end of the sales tax holiday was a deep disappointment.
“We count on it, and it wasn’t going to happen,” he said. “So we came up with a creative way to get people off their couches and into our stores.”
La-Z-Boy still believes the tax holiday — or the lack of one officially — remains a huge draw.
The company said several states where it has stores hold annual tax holidays, but nowhere do customers get quite so hyped up. The summer discount is so popular, it is also offered to Massachusetts customers at its Warwick, R.I., location.
“We don’t see the same type of excitement level in any other area of the country,” she said of the sale.