hgazette.com, Haverhill, MA

August 9, 2012

Editorial: To prosper, state needs real sales tax refo rm

The Haverhill Gazette

---- — This weekend is the one to buy that new refrigerator, washer-dryer, flat screen TV or sofa.

Aug. 11-12 is a sales tax holiday weekend in Massachusetts.

You won’t have to pay the usual 6.25 percent sales tax on most purchases.

That covers a lot of merchandise. In the Bay State, virtually everything is subject to the sales tax, except food and clothing. And even clothing is taxed if the item costs more than $175. So this weekend is also a good one to buy a wedding gown or expensive suit.

Making it an even better shopping weekend is that many Massachusetts retailers will be offering deals tied to the sales tax holiday.

Last year, shoppers saved an estimated $21 million during the two-day tax holiday, according to the state Department of Revenue. That means retailers took in more than $330 million that weekend.

That’s something to celebrate.

But the sales tax holiday is also occasion to think about just how dysfunctional and destructive the Bay State’s tax system is.

The first sales tax holiday was a one-day event in 2004. It was passed as part of an economic stimulus package designed to give Bay Staters a reason to spend a little money in a down economy — or at least spend it here rather than in New Hampshire, where every weekend is sales tax-free.

The Legislature has decreed a sales tax holiday or weekend every year since. Except that is, in 2009, when the solons not only decided the state couldn’t “afford” to lose the money but also raised the tax by 25 percent — from 5 cents on the dollar to 6.25 cents. Thanks a lot, solons.

Despite the savings for taxpayers, the Tax Foundation, a nonprofit, nonpartisan tax research organization based in Washington, D.C. , takes a dim view of sales tax holidays.

A special report by the foundation concludes that such holidays, which 18 states have decreed this year, do little to stimulate the economy as consumers simply time their purchases to take advantage of the temporary tax break.

“Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief,” the report states. “If a state must offer a ‘holiday’ from its tax system, it is a sign that the state’s tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round.”

Fat chance of that, as long as voters keep electing people who consider every nickel saved by taxpayers a nickel lost by the state. The Legislature has resisted calls even to make the sales tax holiday permanent despite the obvious benefits for shoppers and merchants.

We agree that the holiday is no substitute for real reform. But we also believe that we’re all better off with $21 million in consumers’ pockets rather than in state coffers.

So get out and shop this weekend. The pity is that the Bay State’s short-sighted and destructive tax policies have left so few local retail outlets to patronize.