Baker makes last-minute sales tax holiday pitch
One lawmaker, citing sluggish revenues, calls idea 'colossal mistake'
STATE HOUSE NEWS SERVICE
Gov. Charlie Baker is mounting a late bid to return the popular sales tax holiday this year, formally asking lawmakers who have already begun their summer break to approve a proposal to hold the tax-free weekend in just 17 days.
The governor’s plan received an underwhelming reaction from legislative leaders, with one calling the idea a “colossal mistake.”
Baker announced Wednesday that he would file legislation declaring a sales tax holiday for Saturday, Aug. 19, and Sunday, Aug. 20.
“We’ve heard from a lot of folks who said to us that this is really important to them,” Baker added in a WBZ NewsRadio interview. “It’s important to downtowns, it’s important to main streets, and we just think it’s the right thing to do.”
Baker announced he’s filing the bill on the same day he planned to sign an employer-based health care assessment, a proposal businesses have likened to a new tax. The governor ran in 2014 on a campaign built in part on opposition to new fees and higher taxes.
The tax holiday’s fate is uncertain since the House and Senate are on summer recess and if a holiday bill — similar bills are pending before two committees — were to make it to the floor, a single lawmaker could block its progress with a mere objection. The House and Senate plan to meet at least twice a week through August before resuming formal sessions sometime after Labor Day.
The state collected $25.625 billion in taxes during fiscal 2017, which ended June 30, an increase of $355 million, or 1.4 percent over fiscal 2016.
Citing the state’s tight revenue picture, legislative leaders did not express outright opposition but appeared wary of Baker’s tax holiday proposal.
“It makes little sense for the governor to file this legislation now when there are several similar bills already in committee. Each year our hope is to hold a sales tax holiday to give our hardworking citizens and local businesses a boost, which is why the House votes consistently in favor of the sales tax holiday whenever revenues allow,” House Speaker Robert DeLeo said. “This year, the Commonwealth experienced unpredicted revenue shortfalls and, accordingly, the Legislature had to make significant budget cuts to programs and services.”
Senate President Stan Rosenberg said he would await the recommendations of the committee that would be charged with reviewing the bill. “The Commonwealth’s fiscal situation has not really changed,” he said.
Revenue growth has been slow again this year, a factor Baker said he took into consideration when deciding to file the bill. He described the holiday as “certainly one of the more popular things we do here in the Commonwealth.”
Baker is asking lawmakers to agree to the brief tax holiday after he revised tax revenue projections downward for this year by $749 million and vetoed $320 million in spending from the fiscal 2018 budget they passed last month.
Massachusetts finished the last fiscal year, which ended in June, with tax collections that ran $431 million below budget expectations.
The last sales tax holiday, in 2015, passed the House 136-20 and the Senate 27-11. The Department of Revenue estimated $25.5 million in foregone revenue from the holiday that year.
Bills establishing sales tax holidays are pending before the Revenue Committee and the Economic Development and Emerging Technologies Committee.
Rep. Jay Kaufman, the House chair of the Revenue Committee, said the sales tax holiday bills “will continue to sit” before the panel without a vote planned on whether to endorse them. He said he hopes the Legislature does not act on Baker’s bill.
“Sales tax holidays under any circumstances are a mistake, and under these circumstances are a colossal mistake,” the Lexington Democrat said. He described sales tax holidays as “sometimes politically attractive” but “not good public policy.”
“Built into this proposal is the lie that we can provide public services without paying for them,” Kaufman said.
Baker’s bill comes as retail industry officials are planning to file a series of ballot initiatives lowering the sales tax, including two that would decrease the sales tax and establish an annual sales tax holiday in August.
Asked on the radio about the possibility of a permanent sales tax holiday, Baker said, “Having predictability on this is certainly not a bad idea.”Bill Rennie of the Massachusetts Association of Retailers told the Economic Development Committee in July that having a sales tax holiday is important to his group’s members amid a changing retail landscape.
“Our members compete every day with New Hampshire and with online sellers, sellers like Ebay and Overstock who do not charge sales tax,” he said at a July 18 hearing. “We’ve been fighting for decades now to try to get a level playing field with regards to sales tax collection. Until we reach that point, somewhere in the future hopefully, the sales tax holiday at least has provided a two-day equalizer.”