BOSTON — After four years of giving shoppers a break and retailers a lift, Massachusetts lawmakers may give the annual sales tax holiday the summer off.
House Speaker Salvatore DiMasi, D-Boston, is leaning against supporting a sales tax holiday this year, a move local retailers say would be another blow in an already difficult year.
"Given the state of the economy and the state of state revenues, he thinks it's unlikely," said David Guarino, a DiMasi spokesman.
The tax holiday, lasting one weekend in August, allows businesses to waive the 5 percent sales tax on most goods $2,500 or less. Current circumstances justify weighing the holiday annually.
"It's been successful in the past," Guarino said. "But it is something that we have to look at year-to-year and determine if it's feasible."
Local retailers say it would take away a good day of business in a poor economy.
"I think it would be a big mistake," said Brad Tetrault, a manager at Tetrault Jewelers in Newburyport, adding that business has been "horrific" for retailers.
"I think that a lot of the retail businesses ... need all the help they can get," he said.
The tax holiday brings a "big increase," according to Tetrault.
Bill Richard, the owner of Richard's Maytag in Salisbury, said his store sees a "flood of business" during the August weekend. During the tax holiday, sales have "pretty close to doubled" during August, Richard said, with business four times higher than an average Saturday.
"It's worked out very well," Richard said. "It's a nice shot in the arm."
Consumers saved $15.9 million last year during the tax holiday, and $58.3 million since the first one in 2004. As consumers are caught between rising oil and rising food prices, House Minority Leader Bradley Jones Jr. said this is the time to cut people a break.
"The case can be made (that it's needed) now more than ever," Jones said. "People are struggling and having a tough time making ends meet. We've done this four years, and this is the year we're not going to do it?"
Sen. Bruce Tarr, R-Gloucester, whose district includes Newbury, Rowley, West Newbury, Georgetown and Groveland, said the state, which recently approved $250 million in tax incentives for the life sciences industry, can afford this.
"As we're thinking about the other corporate interests, we ought to think about the average person and average small business," Tarr said.
Bob Carey, an owner of the Amesbury Furniture Outlet, said the store opens on Sundays — a day it's normally closed — during tax-free weekends.
"For us, it's been a really big help," he said. "It's an extremely big weekend. If they get rid of it, I think we would probably do less. We more than double our business during the month because of that day, that weekend."
Customers will wait for months to buy an item just on that day, Carey said. Lots of bedroom, living room and dining room sets are sold at that time, he said.
"I've had people wait six months for that day, even just for chairs," Carey said. "When the government gives them 5 percent, everybody jumps on it."
Philip Moss, an economist at University of Massachusetts Lowell, however, said the state loses badly needed revenue while producing very little economic stimulus.
"It sounds good, but it has almost no effect other than cost the state revenue that could be better used," Moss said. "(The state) doesn't have a lot of money to burn."
The one area where it might do good, Moss said, is in the Merrimack Valley, encouraging people there not to drive across the border to sales-tax-free New Hampshire.
The Retailers Association of Massachusetts, which supports the holiday, disagrees. It estimates the holiday brought in $500 million for Bay State businesses last year, as shoppers drawn by bargains made impulse buys.
"It gives locals a reason to shop in Massachusetts rather than going over the line," said Richard, of Richard's Maytag. "I wish the state would rethink it. You're always trying to boost the economy locally."
The tax holiday may not be not dead. Senate President Therese Murray, D-Plymouth, came out in favor of having the tax break this year during a speech to the Greater Boston Chamber of Commerce.
Gov. Deval Patrickl does not have a position on the sales tax holiday. Cyndi Roy, a spokeswoman for the governor, said the issue is "under review."
The Legislature's formal session ends July 31. DiMasi spokesman Guarino said the speaker would take the governor's and Murray's thoughts into account when deciding the holiday's fate.
"He's obviously going to work with the Senate president and the governor to get their thoughts before it's decided," Guarino said.
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