It’s the closest thing to a sales-tax holiday consumers or retailers are going to get this year. On Saturday, the Massachusetts sales tax will rise from 5 percent to 6.25 percent, and retailers are reporting better than average sales as consumers flood the stores in an attempt to save money before the sales tax goes up 25 percent.
It’s the closest thing to a sales-tax holiday consumers or retailers are going to get this year.
On Saturday, the Massachusetts sales tax will rise from 5 percent to 6.25 percent, and retailers are reporting better than average sales as consumers flood the stores in an attempt to save money before the sales tax goes up 25 percent.
“It already started this morning, with people coming in looking for the high-ticket items, and we’ve already sold five LCD and high-definition television sets,” said Paul Charest, owner of Eastern Television in Fall River.
“It’s helping these people to convert to digital, but this week does not compare to the sales-tax holiday weekend we have had in recent years. Those were phenomenal. But the way things are now, there’s not going to be one of those anytime soon.”
First implemented in 2004 as a way to encourage retail sales in the state, Massachusetts has held either a single sales-tax holiday or weekend since then — usually scheduled the third weekend in August. There is no such holiday slated for this year.
“The legislators have not voted on a sales tax holiday this year. So as far as now, there is none scheduled,” said Robert Bliss, spokesman for the Massachusetts Department of Revenue.
According to the Department of Revenue, the state has lost an average of $15 million in tax dollars each year since the tax-free holiday was first implemented.
“The no sales-tax holiday is going to hurt many of us, but there’s been a number of televisions I’ve sold with people trying to get the jump on the tax increase,” said George Saber, owner of Saber Television in Fall River.
The new 6.25 percent tax will put Massachusetts in the top 10 in the country, behind California at 7.25 percent and Indiana, Mississippi, Tennessee, New Jersey and Rhode Island at 7 percent. Bliss said the sales-tax increase will raise an estimated $733 million for the remaining 10 months of fiscal 2010 and $900 million for fiscal 2011.
Leah Schwartz, owner of IZ Schwartz Appliance in Somerset, said her store has been inundated with people looking to get the jump on a big purchase before the increase.
“People that have been putting off these purchases are now coming in to make them in order to beat out the increase,” said Schwartz. “I think with this economy every little bit counts, and people are very price-conscious and will try to avoid paying the extra if they can.”
Fernando Garcia, owner of Fall River Ford, said the rush to beat the impending onslaught of the sales tax increase, as well as the federal stimulus-funded “Cash for Clunkers” program, has a good number of cars driving off the lot these days.
“We’ve seen five cars sold off the lot just this morning. A 25 percent increase is pretty significant,” said Garcia. “But it’s helped us as a closing tool because people are going to save $300 to $400 or more.”
While stores were preparing for a sales-tax holiday at this time last year, Jon Hurst, Massachusetts Retailers Association president, said the only thing the retailers are planning this year is a trip into the great unknown with mounting anxiety on what the sales-tax increase will do to an already tumultuous retail atmosphere. Some retailers have even been advertising the tax increase, Hurst said, in hopes of simply getting people into the stores.
“It’s getting late in the summer season, where retailers are getting ready to get rid of their summer inventory to make way for fall items, but many are working on low margins and this is a way to move their product any way they can,” said Hurst. “Not having a sales-tax holiday is going to be tough on many retailers, but there is some positive news. The month of July is probably going to go on record as the first month in more than a year that actually beat out the prior year’s sales, so there’s hope that the economy and people’s spending may be improving.”
Hurst said he understands the tax increase will encourage consumers to shop elsewhere for products they would typically buy locally in order to save a few bucks, but he asked people to think about the full impact of such a decision.
“I know consumers are keeping their options open and people are really timid right now in their spending and are angry about this tax increase, but they can’t take it out on the retailers,” said Hurst, “This is a business that employs 17 percent of the citizens of the state. They employ the man down the street from you, your friends or a member of your family. We alienate these stores and it’s going to mean a lot more people are going to lose their jobs.”
E-mail Herald News writer Jay Pateakos at firstname.lastname@example.org.