On Thursday, Massachusetts legislators will push forward a bill that would allow a pair of tax holidays for state consumers, marking two days out of the year when Massachusetts shoppers could purchase common, non-luxury item goods, such as clothes and computer software, and not be charged for sales tax. The two chosen days, designed to coincide with heavy shopping-traffic times of the year, would be two Saturdays one before Christmas and the other on Patriots’ Day weekend in April, just before the Boston Marathon. Officials estimate that the state would lose $15 million by alleviating taxes for the two days, but the return on consumer confidence and money pumped into retail outlets would more than make up for it.
While this is only a temporary solution and not guaranteed to give the state economy a much needed booster that legislators hope for, it is still an experiment worth trying. Tax holidays have seen success in other states, such as New York, Texas and Pennsylvania, and, if only for one day, retail outlets do report record sale numbers attesting to their popularity. With as many solutions for bolstering the lagging economy as there are legislators in the Statehouse, the idea of a pair of tax holidays is a good, experimental one that is unlikely to backfire (and cause more problems) if it fails. Although former Acting Gov. Jane Swift proposed the idea during her term in office and it was quickly shelved, a renewed interest in the experiment shows that Massachusetts politicians are perhaps ready to try something out, fail or succeed, and the idea of tax holidays seems like a pretty good bet.
But the Patriots’ Day date may not be a wise choice for one of the two days. While the before-Christmas date is obviously a time of heavy shopping and critical period for consumer confidence, Patriots’ Day and the Boston Marathon are times in which Boston is infused with a great deal of out-of-state and foreign business due to the national and international popularity of the event. It would make more sense to preserve the sales tax on this day when so much money comes into the local economy from non-Massachusetts consumers, and move the tax holiday to a date geared more toward local consumers, such as the Back-to-School period in mid-to-late August.
Although state lawmakers should take another look at the logic of placing one of the holidays on Patriots’ Day weekend, the idea of state tax holidays is certainly a worthwhile experiment.
Whether or not they do anything to boost the economy, local retailers are almost guaranteed to avoid banner sales days, and, if only for two days, Massachusetts consumers will have a good reason to get out and shop.