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Giorgio: End the Sales Tax Holiday

Wednesday, July 22, 2015

 

Massachusetts has been looking for an August Holiday for a long time. No state save Rhode Island has a holiday smack in the middle of summer. Rhode Island is the only state that celebrates Japan’s surrender at the end of World War II as an official holiday. All of the rest of us have to suffer between July 4th and Labor Day without a day off.

So in its infinite wisdom, the Massachusetts Legislature created a Sale Tax Holiday. This was ostensibly created to help business and in the process help people with their back to school purchases.

Since the initial year, the sales tax holiday has spread, so that you can buy anything except a car or a restaurant meal free of the state’s onerous 6.25 percent sales tax.

So how does this help business? It doesn’t. Although the Chambers of Commerce across the state lobbies for this, it does nothing to boost sales. What has happened is that people put off purchases until the sales taxnholiday. You just need to talk to any store owner to discover this. What the holiday does do is put an undue burden on store owners and their employees. They end up squeezing a weeks worth of business into a day. In fact some of the stores have gotten pretty adept at handling the business. You can go in days ahead of time and make your purchase, but have them ring I up on that tax free day designated by the legislature.

No Spur of Moment Purchases

There are very few spur of the moment purchases made. If you are planning to buy a new television for $700, chances are you are going to wait for the sales tax holiday and save yourself $44. Maybe you will take that savings and go out to eat. Then at least someone will benefit-the restaurant and the wait staff.

Most of us have figured out that in August there will be a sales tax holiday and have put off major purchases until that day. Even I am not immune to such skullduggery. A couple of years ago, I had to buy 5000 square feet of flooring for a project I was working on. I waited for the sales tax holiday and saved myself about $625. I also bought appliances that same day and saved myself another $400. Not a bad day’s work. I had to buy them anyway.

End the Myth

So let’s end the myth that the sales tax holiday helps business, because it doesn’t. If you want to call it a gift to the taxpayers of Massachusetts, that is another matter.

The only businesses it may help are those along the New Hampshire border. New Hampshire has no sales tax, so people regularly make to short trip across the state line to shop and save on sales tax. But that is an everyday occurrence. It also happens with the New Hampshire State Liquor Stores which have prices that are lower than stores on our side of the border.

It Costs Us in the End

It has been estimated that this sales tax holiday costs the state about 90 million dollars in lost revenue. Revenue we cannot afford to lose. Governor Charlie Baker has been line item vetoing items in the state budget such as his veto of a $12million item to create more spots for pre schoolers and another $5 million from the UMASS budget which will force working families to pay more in costs.

The original intent of the sales tax holiday was to help parents with back to school expenses. What are we talking about here? A new backpack or some pencils, because we all know that clothes are exempt from the sales tax anyway.

Christmas in August

No the sales tax holiday isn't like Christmas in August. But like Christmas, it leaves the rest of us to throw out the discarded wrapping paper. End this foolish sop and fund preschool programs, we’d all be better off.

 

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