Politics & Government

Sales Tax Holiday This Weekend: Bliss or Boondoggle?

Woo-hoo! No 6.25 percent sales tax this Saturday and Sunday. But — a good or bad thing?

Planning to spend a lot of money this weekend in Westford?

Massachusetts state lawmakers last month picked this weekend, Aug. 10-11, for what has become the almost-annual yearly tax holiday weekend. Shoppers last year saved more than $23 million  by not having to pay the state’s 6.25 percent sales tax.

Also, says MassLive, the sales-tax exemption does not apply to any item that costs more than $2,500; also, all motor vehicles, motorboats, restaurant meals, telecommunications and tobacco products.

Find out what's happening in Westfordwith free, real-time updates from Patch.

So shoppers pocketed millions of dollars in shaving off the 6.25 percent sales tax on what they bought.

But who picked up that tab? The state:

Find out what's happening in Westfordwith free, real-time updates from Patch.

"Based on our analysis of the available data, DOR [Dept. of Revenue] estimates that the amount of forgone sales tax revenue was approximately $23.34 million. DOR estimates that this forgone revenue had no impact on the MBTA State and Local Contribution Fund, but impacted the amounts going to the School Modernization and Reconstruction Trust Fund ($3.7 million), and Commonwealth Transportation Fund ($1.4 million). Further,

DOR estimates that the revenue impact on the Convention Center Fund was slightly higher than $22,900. The remainder of the revenue impact of the sales tax holiday was a revenue loss from the General Fund. The DOR also estimates (although with less certainty) that the indirectly raised revenues (income, corporate, and other) due to increased economic activity was less than $2.3 million."

Boston Globe columnist Tom Keane is scornful about the tax holiday being a “gimmick” — and worse:

"The holidays don’t really encourage more spending. They just encourage people to delay their spending until the holiday occurs (or accelerate the purchase of something they had planned to buy later). Yes, business will be booming this weekend. But that comes at a cost of somewhat less business the other 51 weekends of the year.

On the flip side, consumers don’t benefit that much either. Most studies find retailers in effect use the tax breaks as a substitute for cutting their prices."

So, what are you doing this weekend? Are you planning to take advantage of the tax holiday to buy something you would have bought some other weekend, anyway? Or are you planning to spend when you would not have without the 6.25 percent discount? Do you think sales-tax holidays are a destructive gimmick that siphon needed revenues from state coffers? Or should we all just chill and enjoy basking in a blissful tax-free weekend? The comments section is below.



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