Massachusetts legislature failed to establish the sales tax holiday that retailers have seen for 11 of the last 12 years.
Only once during the recession of 2009 did the holiday not encourage summertime main st. retail sales in the Commonwealth of Massachusetts.
Jon B. Hurst, president of the Retailers Association of Massachusetts said, “To not authorize these two days would be both economically and politically shortsighted,”. The holiday, he said, is “about keeping struggling Main Street in business at a time when tax-free mobile commerce is increasing at alarming rates.” - Credit to Joshua Miller of the Boston Globe for the quote.
Massachusetts sales tax is 6.25% on most retail items (the exceptions are listed here) and the Department of Revenue has estimated that the two day holiday can cost the state as much as 25.5 million in forgone revenues. Amazon and other major online retailers do collect sales tax so this may be partially true but it may be overstated.
What we do know for certain is that Massachusetts retailers DEFINITELY LOSE money when tax thrift shoppers flip what would have been a tax-free weekend of shopping in Massachusetts into a tax-free weekend of shopping in *gasp* Connecticut for their tax holiday (please do not do this) or a New Hampshire getaway (Anytime) whilst whistling the tune of another mauling of Massachusetts main street retailers desperately fighting to compete with online retailers.
Because the issue often comes down to the wire, retailers counting on the summertime cash flow were already advertising for it.
According to Josh Miller of the Boston Globe when the matter was being discussed in July;
"House Speaker Robert A. DeLeo said that pausing the sales tax holiday “may be, possibly be, something we may have to take a look at.”
Additionally, The Senate, said its president, Stanley C. Rosenberg, “has increasingly been skeptical about whether this is a good use of $20 [million], now $25 million a year.”
Governor Charlie Baker said skipping the tax holiday “ought to be part of the conversation” as the state looks to close the projected budget hole.
It is a big deal to abandon this holiday because even if your representatives that did it are correct in their supposition that the same purchases will be made during the winter holiday season, what we know for sure is that many retailers really struggle with cash flow in their business.
For retailers to lose this tax-holiday induced cash injection means many of them will have to incure additional time and cost to closely watch cash flow; causing them to hold thier dollars tightly to make sure they can make it to winter holiday season.
How does this affect you? Maybe now they do not hire your child for her first job stocking shelves and/or maybe now they will not have the ipad in stock when you need to get a last minute gift for your friends last minute party.
Maybe now you wont have the store to walk to all because the added stress causes the weary business owner to decide that it is not worth the added stress to try and compete anymore.