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For the first time since 2009, it appears Massachusetts consumers will not get a reprieve from the state's 6.25 percent sales tax this summer, legislative leaders said Monday.
The sales tax holiday has been something of an August tradition since 2004, an effort to spur consumer spending during what is generally a slow time of year for retailers. But this year, as tax collections fell short of fiscal 2016 projections and lawmakers in June lowered their expectations for fiscal year 2017 by $750 million, the holiday seemed to fall out of favor with lawmakers.
"When you're talking about the shortfall that we're in, we considered to add another $26 million to that shortfall, just doesn't make a whole lot of sense," House Speaker Robert DeLeo said. "It's always at least been my position that it depends strongly on the economic situation at the time. The economic situation this time calls that we don't have it."
Senate President Stanley Rosenberg responded simply, "nope," when asked if he anticipates having a sales tax holiday this summer. "Too expensive and we're almost done, I don't see it coming up," he said.
Asked if the decision to eschew the tax-free weekend was final, DeLeo said, "I would say from my perspective it is." Rosenberg said the decision is "certainly" final on the Senate side.
Gov. Charlie Baker, a Republican who last year took advantage of the holiday to buy a new flat screen TV, said the decision was out of his hands, but seemed to agree with DeLeo and Rosenberg's assessment.
"They control the ball a bit on this one," he said, referring to the legislative leaders whose branches would have to approve the reprieve. "And I certainly have expressed my concerns about the fiscal situation we find ourselves in in fiscal '17 as well."
The holiday has become such a visible summertime event that some retailers have already begun to advertise sales associated with the holiday.
Jordan's Furniture recently began airing a television ad in which proprietor Eliot Tatelman says, "Everyone in Massachusetts knows that the middle of August will most likely be a tax-free weekend," and announces the furniture store will give customers who buy goods now a credit worth twice the sales tax.
Bill Rennie, vice president of the Retailers Association of Massachusetts, said retailers will be "very disappointed" that they won't be able to count on a boost in sales from the tax-free weekend.
"It's proven over the years to be very popular with our members and obviously with consumers, who have been able to save significant amounts of money over the years," Rennie said. "It's important for our members because our members compete every day with New Hampshire and increasingly online competitors who very often are selling tax-free. That's 365 days a year, so the sales tax holiday has been that two-day equalizer."
Though there have been proposals in both branches to establish a permanent sales tax holiday, DeLeo said the circumstances this year demonstrate the value of waiving the sales tax on a year-to-year basis.
"I think precisely for situations like this, it has not been made permanent," he said.
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