Retailers Mull Ballot Question, Wait On Tax Holiday Decision
A 2018 ballot campaign to lower the state's 6.25 percent sales tax is being considered by brick-and-mortar retailers stung by the migration of consumers to online shopping and frustrated by Beacon Hill's retreat from an annual sales tax holiday.
"It's having a severe impact on dark storefronts, everywhere from our main streets to our major retail malls," said Jon Hurst, longtime president of the Retailers Association of Massachusetts.
Anger among Bay State merchants, Hurst said in an interview, has reached a level he's never seen, fueled partly by the perceived inequity of a sales tax they must collect but that out-of-state online retailers -- not to mention stores in tax-free New Hampshire -- do not.
Popular with retailers and shoppers alike, the two-day sales tax holiday was becoming a summer tradition before lawmakers scrapped it last year amid concerns over slumping revenues. Those worries have not abated.
A recently approved $40.2 billion state budget slashed revenue projections for the new fiscal year by $733 million, raising fresh doubts about whether Massachusetts can afford to surrender even two days of sales tax receipts.
Democratic legislative leaders haven't altogether ruled out reviving the sales tax holiday in August, but time is running short.
Robert Saquet, owner of Eggers Furniture in Middleborough, a business that traces its roots to 1832, said the summer tax holiday is a shot in the arm for retailers.
"It takes an otherwise slow month and makes it busy," he said. "It motivates people to spend money."
The store's August sales were off some 80 percent last year compared to the previous year, Saquet added, when there was a sales tax holiday.
"People feel when they have a chance to beat the tax man, they do it," he said.
Hurst's group, meanwhile, has been gauging support from retailers for trying to lower the sales tax, possibly to 4.5 or 5 percent, through a ballot question. The first step in a lengthy process to place a question before voters would be filing an initiative petition with the state attorney general by Aug. 2.
Among potential obstacles would be the daunting costs involved in a ballot campaign, including the required collection of some 65,000 voter signatures.
"I don't know that it really makes sense to solve this problem through a ballot initiative," Hurst conceded, but added it could serve as a "wake-up call" to spur action by policymakers who may not fully grasp the plight of retailers.
While not linking the possible ballot drive directly to the sales tax holiday, Hurst suggested approval of a holiday would be a show of good faith by legislators and likely prompt further discussion among his members.
Rep. Brad Jones, the House Republican leader, has filed a bill to designate Aug. 12-13 as this year's sales tax holiday. The Senate's GOP leader, Bruce Tarr, has filed legislation to end the annual summer guessing game by making the holiday a permanent fixture.
Neither bill has been released from committee.
Estimates by the Department of Revenue that Massachusetts foregoes $26 million in taxes it would otherwise collect are often cited as an argument against a sales tax holiday. Retailers dispute the methodology behind those estimates. Moreover, they point to other economic benefits that arise when shoppers pack malls on a lazy summer weekend rather than lounge on the beach.
Should a sales tax question reach the November 2018 ballot, it would likely appear alongside a proposed constitutional amendment imposing a 4 percent surtax on annual incomes above $1 million. That would create a scenario in which voters could raise tax revenue through one measure while lowering it through another.
Steve Crawford, a spokesman for Raise Up Massachusetts, which is spearheading the campaign for the so-called "millionaire tax," said the group isn't worrying at this point about competition from a sales tax cut.
"I do have a lot of faith in the voters and their ability to really focus on these questions and understand the impact on them individually and collectively," Crawford added.