NORTHAMPTON — After 12 years of a tax-free weekend almost every summer, Massachusetts shoppers may not be able to splurge without paying the sales tax this year.
Every year since 2004, except 2009, Massachusetts has lifted its sales tax during a weekend in August, giving many shoppers an incentive for big purchases like computers, appliances, and other expensive items.
The tradition began when Republicans in the Massachusetts Legislature pushed for the tax holiday, in part to help consumers and business owners during the back-to-school shopping season.
This year, however, may be different. The state’s projections for tax revenue this fiscal year were off by hundreds of millions of dollars, leaving legislators looking for ways to cut costs without layoffs or cutting essential programs.
Gov. Charlie Baker announced last week that the state is running a budget deficit of well over $300 million, a shortfall his administration predicts could fall even further to $750 million by the end of the fiscal year beginning July 1. Lawmakers have largely blamed the revenue shortfall on instability in the stock market and a decrease in capital gains, corporate, and income tax revenues, though they acknowledge that there are many factors contributing to the problem.
Whatever the causes, the deficit has forced the Legislature to take a hard look at the budget for the coming months. The tax holiday, often among the first items recommended for the chopping block, costs the state between $23 million and $28 million per year.
State Rep. Ellen Story, D-Amherst, believes the tax-free weekend has “always been a gimmick.”
“As far as I’m concerned, it’s seen as a superfluous waste. It’s expensive,” she said, noting that the benefit to local economies is not worth the lost tax revenue for the state.
“People don’t buy more,” she added, citing studies that show that consumers generally make only large purchases on tax holidays, often waiting months to do so.
“If we can avoid losing $28 million in lost revenue, it would be sensible to do so,” she said.
Story, who is retiring from the House after her current term, said she hopes that the holiday will be permanently dropped.
State Senate President Stanley Rosenberg, D-Amherst, also has expressed skepticism that the tax holiday is a good use of money given the current budget issues, and many Democratic legislators have called for its suspension for at least this year.
“It seems we are in a very precarious fiscal situation,” he said, though when asked if it is likely that the holiday would be suspended, Rosenberg replied, “I’m not a betting man.”
Many Republicans, however, would prefer to do the opposite and make the tax holiday a permanent fixture on the calendar.
“I believe we should have a tax-free weekend in August,” said Sen. Donald F. Humason Jr., R-Westfield. “We may lose sales tax, but we pick up other things along the way,” he said, noting that the tax holiday encourages a boost in sales in an otherwise slow part of the year.
Humason, whose district includes Easthampton and Southampton, said of Democrats, “They feel they can spend the money better than our constituents, and I disagree.”
Humason also expressed concern that Massachusetts residents will simply shop for certain items in New Hampshire — where there is no sales tax to begin with — thereby taking business away from their home state.
“People vote with their wallets, and I don’t blame them,” he said.
Some businesses are also chiming in, saying that getting rid of the holiday will take away much-needed revenue in August.
“It would be a pretty bad hit to most businesses,” said Helena Sullivan, a sales associate at Yes Computers in Northampton. “It’s literally our biggest weekend of the year.”
“Tax Free Weekend,” as businesses usually refer to it, is an even bigger boon for the computer shop than the day after Thanksgiving, or Black Friday, she said.
The Legislature will vote in the coming weeks whether to have the tax holiday this year.
Considering the state’s current finances, Rep. Peter Kocot, D-Northampton, said he is not optimistic about its chances. “At this point, locking in a $25 million sales holiday might be premature.”
Isaac Burke can be reached at iburke@umass.edu.