Tax-free weekend on the ropes

White City Shopping Center in Shrewsbury is home to a number of retailers who could take advantage of the Sales Tax Holiday.

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By Sam Bonacci

As the state government continues to deal with stunted revenues, it appears the sales tax holiday that has come to be a staple in Massachusetts retailer's August plans might be one of the casualties.

The Sales Tax Holiday eliminates the state's 6.25-percent tax on purchases up to $2,500 during the designated day or weekend. While not a guarantee, it has been voted through in 11 of the past 12 years, with 2009 being the exception.

However, this year may become an exception as well, as the House already passed at a chance to include a sales tax holiday in its $915-million economic development bill. The Senate could move a tax holiday forward in its version of the bill, but with the current climate at the state, it seems just as likely that it could be passed over this year.

The concern

Money, or the lack of it coming into the state's coffers, is the main concern. The state is looking at a $750-million shortfall from previous revenue estimates for fiscal 2017 and the tax-free weekend would only add to that. Department of Revenue estimates place the loss of tax revenue for last year's tax holiday at $25.51 million.

But money is also the concern on the side of the business community, said Stuart Loosemore, Worcester Regional Chamber of Commerce director of government affairs and public policy. Estimates from the Retailers Association of Massachusetts placed the economic benefit of last year's sales holiday to be roughly $168 million. This takes into account not only additional sales, but added shifts by retailers and ancillary spending by shoppers such as dining while out.

“We recognize it is a loss in sales tax revenue… but there is such a boon to those businesses that it really does outweigh it,” Loosemore said.

The benefit can especially be felt in Worcester County and locations near tax-free New Hampshire, he said, as well as in the face of online competition.

“For that weekend it creates a level playing field for the smaller retailers that are trying to strive and hang on at times,” Loosemore said. n