State fails to OK tax holiday for 2nd year

Massachusetts retailers will decide Wednesday whether to advocate for a 2018 ballot initiative to slash the sales tax, after the Legislature adjourned Friday without approving a sales tax holiday for the second year in a row, said Jon Hurst, president of the Retailers Association of Massachusetts.

“I’m not sure the public policy leaders totally understand what is happening with consumers and how billions of dollars are leaving the local economy,” Hurst told the Herald, describing retailers as “disappointed.”

The group has until 5 p.m. Wednesday to file language with Attorney General Maura Healey’s office on a ballot measure.

Bay State lawmakers have approved a sales tax holiday in 11 of the past 13 years. The holiday temporarily suspends the state’s 6.25 percent sales tax, but some legislators have argued that the state can’t afford to lose the estimated $26 million in tax revenue this year. The recently approved $40.2 billion state budget slashed revenue projections for the new fiscal year by $733 million.

“It is not necessarily surprising given that fact that the state’s budget picture is similar to what it was last year,” Hurst said. “It is debatable whether it is because of inadequate revenue or excessive expenditure. It is disappointing for consumers.”

Business groups argue local retailers are feeling the pinch as consumers migrate to online shopping.

“We have a discriminatory sales tax law that allows competitors online to avoid the sales tax,” Hurst said. “They have a 365-day-a-year sales tax holiday. It shows a lack of understanding.”

Hurst’s group has been looking at whether there is support for a ballot initiative to drop the state sales tax to 4.5 percent or 5 percent.

But Ken Perkins, an analyst for Swampscott-based Retail Metrics Inc., said he doubts there would be much public interest in a push to lower the sales tax, given that most people are focused on federal policies.

“I don’t see any uproar about this. It’s a short thing for two to three days. I don’t see a grassroots movement afoot,” Perkins said. “I think people are focused on health care.”

If the sales tax question does make the ballot, it would appear alongside the Fair Share Amendment, a proposed constitutional amendment that would impose a 4 percent surtax on annual incomes above $1 million.

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