Amid budget concerns, lawmakers consider nixing sales tax holiday again
Faced with a $439 million budget gap, state lawmakers are considering whether to cancel an annual sales tax holiday in August for the second year in a row.
Business owners, lawmakers, and retail industry representatives offered testimony at a public hearing Tuesday at the State House on several sales tax-related bills, including four that aim to reinstate the holiday.
Almost every August since 2004, lawmakers have granted consumers a two-day reprieve from the state’s 6.25 percent sales tax, in an effort to incentivize local spending and give Massachusetts retailers a boost during a slow month.
The state has canceled the tax hiatus only twice: in 2009, at the height of the global recession, and last July, when lawmakers expressed concerns about revenue shortfalls. A Massachusetts Department of Revenue report found that the state lost $25.5 million in forgone tax revenue from the last holiday in 2015.
The Joint Committee on Revenue heard testimony on four bills during Tuesday’s hearing: two that would make the sales tax holiday permanent, and, if those fail, two that would safeguard the holiday in 2017 and 2018.
Last week, the Retailers Association of Massachusetts urged members to lobby lawmakers to restore the holiday, particularly as they face increasing competition from sales-tax-exempt online vendors.
“The sales tax holiday is something that it’s not a question of whether we can afford to do it now — it’s a question of whether we can not afford to do it,” Jon Hurst, president of the Retailers Association of Massachusetts, told the committee. “We’re seeing too many dark storefronts.”
Anthony Goodh, who owns BoConcept furniture store in Cambridge, said his sales doubled in past years during the tax-exempt weekend, which he described as better for business than Black Friday.
“There’s something about not paying taxes that makes people crazy,” he said.
Small businesses like his have come to rely on the holiday, Goodh told the committee. “Last year, I think we felt side-tracked. We were all expecting it . . . and then it didn’t happen, and we were all really affected by this,” he said.
No one testified against the bills Tuesday, but lawmakers are treading cautiously on the subject. At the hearing, state senator and committee member Kathleen O’Connor-Ives raised concerns about big businesses based in Massachusetts taking advantage of the holiday. And Senate committee chairman Michael D. Brady said, “There’s a larger discussion on both sides.”
But Beacon Hill leaders remain noncommittal. Earlier this year, Senate President Stanley C. Rosenberg declined to commit to a sales tax holiday in August.
“The sales tax holiday legislation will be reviewed as it goes through the process,” Seth Gitell, a spokesperson for House Speaker Robert A. DeLeo, wrote in a statement.
Governor Charlie Baker told reporters Monday that he is open to the idea of a holiday this August.
“I think we should take a look at it and consider doing it,” he said. “It’s very tough to be in retail these days, and I think it’s something that’s worth consideration.”
Lawmakers will need to report one or more of the bills out of committee before the Legislature makes a final decision.