Massachusetts may scrap 2016 sales tax holiday

In face of a growing state deficit, several Massachusetts legislators are questioning the wisdom of the state’s sales tax holiday. This is not the first time.

For 12 out of the last 13 years, the Bay State has held a tax-free period at some point in the summer, usually August. Yet each year, many lawmakers wonder “whether this is a good use of $20 million, now $25 million a year.” Noting this, Senate President Stan Rosenberg (D) now says, “It’s on the table for discussion.”

There is at least one good reason to discuss it: Governor Charlie Baker (R) has announced a $320 million to $370 million deficit for the fiscal year ending June 30, and an even greater deficit is now projected for the FY 2017. The governor agrees the future of the sales tax holiday should be discussed but hasn’t said whether he thinks it should stay or go.

Retailers generally are in favor of keeping the tax-free period, calling it “critical to our summer business” and “a huge infusion of revenue for us each year.” Yet some are less enthusiastic about them, saying they create “more problems than benefits” and shift sales rather than create new ones (Massachusetts sales tax holiday: helpful or harmful?).

More than a dozen states are offering sales tax holidays in 2016. Sales tax software (SaaS) enables businesses to swiftly and accurately account for temporary changes in sales and use tax rates. Learn more.