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When shoppers hit the malls and Main streets during the state's tax-free weekend, their lunch or dinner will continue to be taxed at 6.25% or higher after the Legislature Wednesday voted to exclude meals from the sales tax holiday.
The change was made at the request of Gov. Charlie Baker and restaurant owners who were concerned about their ability to implement a two-day tax holiday, and whether the cost of trying would outweigh any benefit.
Bob Luz, the president the Massachusetts Restaurant Association, said restaurants don't have the capability when applying taxes to a check to separate food from alcohol.
"I think at the end of the day when everybody realized what had happened, the governor quite honestly had one of two options, either include alcohol or don't," Luz said.
According to the administration, Baker approached legislative leaders with a proposal to include alcohol in the tax holiday, but could not find "clear consensus" among Democrats. Because of the time sensitivity, Baker opted instead to exclude meals, consistent with how the holiday has worked for many years.
To make that happen, the governor filed an amendment to the annual state budget signed Wednesday that the House and Senate took up immediately, approved and sent back to Baker, who is expected to sign it.
The sales tax holiday weekend has been scheduled for Aug. 17 and 18.
After last year's "grand bargain" law made the sales tax holiday a permanent fixture on the Massachusetts calendar, the Department of Revenue informed restaurants several weeks ago that for the first time meals would be included.
The department, however, also advised that alcohol would not be exempt from taxation. That created a problem for restaurants.
"Unlike retail, their point of sale systems would have taxable and non-taxable items on the same transaction because that happens in the retail environment. In restaurants we just apply six and quarter plus any local meals taxes to everybody. There's never any non-taxable," Luz said.
Rep. Paul Brodeur, who helped write the "grand bargain" law last summer, said lawmakers heard the concerns of restaurant owners "loud and clear."
"So we are going to roll that back and make sure they can do the business they've always done in a very efficient fashion. Simple," Brodeur said.
Senate Ways and Means Chairman Michael Rodrigues told senators before the vote that restaurant owners had told him they never asked to be included in the sales tax holiday weekend.
Luz said the enticement of being able to offer customers a tax-free meal on a weekend was not strong enough to consider bringing on additional staff to handle the tax issue.
"At the end of the day, the burden of trying to get this done for two of our busiest days of the week outweighed any possible benefit," Luz said.
"It might be different if we were talking about a Monday or Tuesday," he added.
Unlike retailers, Luz said restaurants also don't face the same threat of losing business to other states, like New Hampshire where the meals tax is 9%, or online.
Years ago, the restaurants did lobby for a meals-tax-free week in mid-March when business tends to slow down.
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