BOSTON — The state’s 6.25 percent sales tax will be temporarily suspended the weekend of Aug. 10 and 11 under a bill that sailed through the Legislature Wednesday and only requires the governor’s signature to become law.
Gov. Deval Patrick had said Monday he expects to sign the tax suspension law as long as the more than $20 million in foregone revenue is made up with other funds – concerns the bill appears to address.
According to the Department of Revenue, the tax holiday will forgo $21.9 million to $26.7 million this year. While no lawmakers attempted to block the bill’s passage Wednesday, some have questioned the wisdom of letting so much potential tax revenue go uncollected.
“I understand why people like it, but it’s baffling to me because while I understand people feel they would like to save money on any tax, it’s important to understand there are so many things we’re trying to accomplish under a challenging state budget where we’re short in so many areas,” said Sen. Dan Wolf, a Harwich Democrat.
The perennial passage of a bill retailers see as an economic stimulus occurred while both House and Senate were in informal sessions, which precludes roll call votes. But the bill’s journey through the chambers afforded Republicans an opportunity to attempt to extend the holiday or make it permanent.
“Given the fact that what we did today was largely an expected measure and a non-controversial measure, I don’t think it comes as any surprise that we did it in an informal session,” said Gloucester Republican and Senate Minority Leader Bruce Tarr, whose three amendments were rejected.
“I do think we missed some opportunities to evolve the sales tax holiday and to establish it permanently so that we don’t have to come in in informal sessions to approve something that everyone expects and deserves,” Tarr added.
Sure of its passage, some retailers have been featuring tax holiday hooks in recent ads to customers.
Since it was first enacted as a single-day holiday in 2004, Tarr said on the Senate floor, only one year has passed without such a break from the state’s sales tax. The state skipped the annual tradition in 2009, a year the Legislature bolstered the recession-battered state coffers by raising the sales tax from 5 percent to 6.25 percent.
Wednesday also marked the first day of tax increases on gas and tobacco, and the new application of the sales tax to certain computer services, levies worth an estimated $500 million and intended to fund transportation improvements but which opponents say will hurt economic growth.
“The sales tax holiday is an opportunity to help individuals, families and businesses across the Commonwealth,” House Speaker Robert DeLeo said in a statement. “While the Massachusetts economy is continuing to improve, folks are still facing tough fiscal times. By passing this legislation, the House of Representatives reaffirmed its commitment to supporting local businesses and keeping jobs in Massachusetts.”
“Continuing the sales tax holiday is good for our recovering economy,” said Senate President Therese Murray in a statement that accompanied the missive from DeLeo. “Not only does it boost sales but it puts extra money in people’s pockets, raises consumer confidence and helps families and parents who have to buy electronics for back-to-school. This legislation provides much-needed financial relief to residents while benefiting both large and small retail businesses.”
The tax holiday includes restrictions. It does not apply to tobacco, telecommunications, gas, steam, electricity, motor vehicles or boats, nor does it apply to a single product with a price higher than $2,500.
“Today we did at least get some reprieve from the wave of new taxation that is flowing onto the citizens of the Commonwealth,” Tarr told the News Service.
Massachusetts Retailers Association President Jon Hurst has said even sellers who are not subject to the legislation join in by timing sales for the weekend.
Legislators have been cautious enshrining the August tax holiday in law because of concerns that consumers may postpone large purchases until the August weekend. Instead, they have opted to pass tax holiday laws each summer, with regularity, just before the targeted weekend.
Tarr said the attempt to create suspense among shoppers has failed, saying on his way in Wednesday, before the bill even appeared before the Senate, he heard a radio ad touting the upcoming holiday.
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