state house sealRepresentative Christine Barber, Representative Denise Provost and Senator Patricia Jehlen were among the twenty representatives and eleven senators to vote to oppose the sales tax holiday this week. In the House, the bill passed 136-20; in the Senate the vote was 27-11.

There is growing skepticism in about the legislature’s annual ritual of voting for a two-day sales tax holiday in August. In ten of the past eleven years, shoppers have been given a pass on paying the sales tax on most purchases under $2500. Proponents of the measure have argued that it encourages sales that, in turn, raise profits and stimulate the economy. But a growing number of legislators counter that it doesn’t work this way. During the 2014 Sales Tax Holiday, more than $24.5 million in revenue was lost.

“What the sales tax holiday does is cost the state budget significant funding that could be used for critical programs like education, local aid for our cities, and public transportation,” said Rep. Christine Barber. “And I heard from constituents that the tax holiday was not worth it.”

The Massachusetts Department of Revenue’s evaluations of the tax holidays consistently show that they are a bad investment. And, studies suggest that seeming economic benefits are a result of consumers merely shifting the date they purchase items, rather than an actual increase in total sales.

Over the past five years, the Commonwealth has lost a net of approximately $100 million in revenue from the holiday; $18 million of this money would have been attributed to the school building assistance fund. The Mass Taxpayers Foundation and Mass Budget and Policy Center, two fiscal watchdog groups that rarely agree, have both come out against the bill.

“The sales tax holiday is bad policy,” said Sen. Jehlen. “It doesn’t generate more economic activity in the state, it only shifts spending – especially since consumers have come to expect it and plan for it. There are so many better ways for Massachusetts to spend $25 million. $25 million could buy approximately 26 new Green Line cars. We could pay for 1900 new housing vouchers statewide, increase kindergarten expansion grants by 130%, or increase the Unaccompanied Homeless Youth program by 1250%. We could adjust the eligibility threshold to allow 9000 more seniors access to homecare. $25 million could almost completely pay for the Governor’s new substance abuse treatment measures. I’m very glad to see more people speaking out in opposition to the sales tax holiday, and I hope that this year is its last.”

 

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