Sales Tax Hike Punitive For Shop Owners
Small, independent retailers are a vital part of our communities. They are the faithful sponsors of the local little league team, the various walks for charity, and the annual holiday parade. These businesses give our downtowns vibrancy and character.
On Main Streets across Massachusetts, these businesses are struggling like never before.
The economic collapse combined with an ongoing challenge to compete with businesses in tax-free New Hampshire and on the Internet have many on the verge of closing.
Unfortunately, the leadership on Beacon Hill is moving to make it even worse for Main Street businesses by imposing a 25 percent increase on the state’s sales tax.
It is a move that that will further depress consumer spending and send billions of dollars in purchases to employers outside our borders. Increasing the sale tax at this time is horrible public policy and here’s why:
An increase in the sales tax will push retail sales out of the commonwealth. While proponents of a sales tax increase like to downplay the impact it will have on consumer behavior, the reality is the economic downturn now has families looking closely at how they spend every penny.
Increasing the sales tax will send Massachusetts residents flocking to New Hampshire in even greater numbers and buying more online.
In the past six months, there has been a significant shift toward shopping on the Internet. Just last month Amazon.com reported an increase in sales of 18 percent in the first quarter, and web-based sellers nationally are up 11 percent in 2009.
An increase in the sales tax is bad economic policy. A sales tax increase is truly economic stimulus in reverse. While Washington is trying to get consumers to spend more, should Massachusetts really put in place a measure that will encourage less spending? It makes no sense at all at a time when retailers are hoping to help restart the economy.
An increase in the sales tax is highly regressive. It disproportionately hurts the poor and working families. While upper income families have the transportation options to drive to NH, as well as spending power and Internet access to make their purchases tax free, that is simply not the case with the less affluent. In spite of the current exemptions for lower priced clothing and food, this will hit the hardest those that can least afford it.
Unlike many of our financial institutions or the automobile industry, the small retailer isn’t looking for a government bailout. They simply want government to give them a fair chance at keeping their Main Street storefronts open in difficult times.
If our leaders on Beacon Hill increase the sales tax, it will unfairly burden small businesses, depress consumer spending, put many people out of work, and hurt our communities by turning the commonwealth’s main streets into ghost towns.
Jon Hurst is the president of the Boston-based Retailers Association of Massachusetts. He can be reached at jhurst@retailersma.org.
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