Massachusetts’ summer sales tax holiday got a high-profile endorsement Wednesday, when Governor Charlie Baker filed legislation to designate a tax-free weekend in August. But with House and Senate leadership averse to the idea, the state will likely forgo the holiday for the second year in a row.
Baker submitted a bill Wednesday morning to suspend the 6.25 percent sales tax on Aug. 19 and 20 on items priced at less than $2,500, with some exceptions.
“The sales tax holiday gives consumers a much-needed break and supports business across the Commonwealth for our hard-working retailers,” Baker said in a press release. “We look forward to working with the Legislature to make this important weekend possible, so the Commonwealth can shop local and make purchases tax free.”
But appetite for the holiday on Beacon Hill has weakened in recent years amid revenue shortfalls, prompting lawmakers to pass up the two-day tax reprieve last August for the second time since 2004.
With significant shortfalls last fiscal year — and a 2018 budget based on $750 million less in tax revenue than the initial baseline — lawmakers have been hesitant to greenlight the holiday this summer. In 2015, the state relinquished $25.5 million in potential revenue during the tax-free weekend, according to a Massachusetts Department of Revenue report.
Without support from House and Senate leadership, a holiday this year looks unlikely. House Speaker Robert A. DeLeo released a statement Wednesday criticizing Baker’s move as financially unwise.
“It makes little sense for the governor to file this legislation now when there are several similar bills already in committee,” he said. “This year, the Commonwealth experienced unpredicted revenue shortfalls and accordingly, the Legislature had to make significant budget cuts to programs and services.”
DeLeo wrote that financial support for cities and towns that the Legislature maintained in last month’s budget negotiations will aid local retailers. “These choices ultimately benefit local businesses, all of which require a strong local economy and infrastructure to thrive in the long term,” he said.
Senate President Stanley C. Rosenberg also referred to the state’s financial straits in a statement Wednesday. “The bill will be sent to the appropriate committee for review, and I will await their recommendations. The Commonwealth’s fiscal situation has not really changed,” he said.
Retailers say the holiday provides a much-needed boon to local businesses, particularly as they face increasing competition from online outfits.
“The sales tax holiday is really a life-preserver for small businesses in the state, which have a six-and-a-quarter-percent anchor drowning them,” said Jon Hurst, president of the Retailers Association of Massachusetts.
“In the days of proliferating online sellers . . . we’ve got to do something to help our small businesses.”
The Retailers Association of Massachusetts has lobbied on behalf of several similar bills lawmakers filed to reinstate the holiday this summer, and Hurst expressed gratitude toward Baker for submitting another such bill. But he acknowledged Wednesday that prospects for a holiday this year are bleak. “I’m not expecting that they will do this, unfortunately, but we appreciate the support of the governor,” he said.
In his statement, DeLeo pledged to pursue other avenues to level the playing field between online and brick-and-mortar retailers — specifically, supporting federal efforts.
The Legislature’s Joint Committee on Revenue is already considering other sales tax holiday bills. In order for a holiday to take effect, legislators would have to report one of them out of committee and pass it in the next couple of weeks.
State Representative Jay Kaufman, the House chair of that committee, said he does not support doing so.