Massachusetts may skip its sales-tax holiday this year
Don’t hold your breath on getting a state-backed tax break on that new fridge this summer.
Facing what could be a $750 million budget gap in the fiscal year that begins in July, the top three Beacon Hill officials expressed openness Monday to canceling the traditional sales tax holiday this year.
So the popular summer weekend reprieve from the 6.25 percent levy — beloved by many consumers, and retailers, and heavily advertised — could itself go on holiday this season.
The Senate, said its president, Stanley C. Rosenberg, “has increasingly been skeptical about whether this is a good use of $20 [million], now $25 million a year.”
Governor Charlie Baker said skipping the tax holiday “ought to be part of the conversation” as the state looks to close the projected budget hole.
And House Speaker Robert A. DeLeo said he still wants more data before giving a firm opinion, but pausing the sales tax holiday “may be, possibly be, something we may have to take a look at.”
During last year’s sales tax holiday, which applied to almost all retail items priced $2,500 or less on Aug. 15-16, the state lost out on about $26 million of sales tax revenue, according to an estimate from the Department of Revenue. That’s $26 million consumers saved.
Opponents have long fretted that the weekend pause on the sales tax diverts money from key state programs, and alters when consumers spend their cash, rather than boosting the economy more broadly.
But retailers assert that the holiday is a boon to the state’s economy and that vastly outweighs the revenue the state forgoes.
“To not authorize these two days would be both economically and politically shortsighted,” said Jon B. Hurst, president of the Retailers Association of Massachusetts.
The holiday, he said Monday, is “about keeping struggling Main Street in business at a time when tax-free mobile commerce is increasing at alarming rates.”
While the holiday has been a tradition since 2004, it’s not enshrined in law. The Legislature has to pass it each year.
There is a precedent for sales tax holiday hiatus: There was no sales tax holiday in 2009 when Massachusetts faced another budget crunch.
Meanwhile, the governor filed a month-long temporary budget Monday afternoon. Should it pass, as expected, it will give legislators and Baker more time to hash out a slimmed down budget for the new fiscal year.