State Loses Tax Free Weekend for 2016, an Important Economic Driver

Keeps money in local communities

The Worcester Regional Chamber of Commerce understands state budget challenges this year just like during prior recession-eras. Year 2009 is the last time the tax-free holiday weekend was not adopted by the Massachusetts legislature. Even though it is not happening this year, there are compelling reasons to preserve this vital economic tool for years to come.

The tax-free holiday weekend offers positive financial gain for countless small businesses. Customers are more prone to shop when they don’t have to pay the 6.25-percent sales tax on purchases up to $2,500. Survey results compiled last year by the Retailers Association of Massachusetts estimates the economic benefit of having a tax-free weekend is $168 million. For many retailers find the sudden rush of consumer spending helpful. Tax free weekend impacts their traditionally slowest sales season. Thus, it makes a substantial contribution to economic survival.

Consider the multiplier effect for non-consumer goods restaurants and other retailers who also realize better sales and activity. The tax-free holiday weekend allows our members – like Rotmans Furniture and Flooring Center or Percy’s TV & Appliance. This helps them to compete on a more level playing field. Also, states like tax-free New Hampshire and big box stores from out of state now process transactions via the internet. This is thanks to an existing loophole allowing them to forego charging consumers sales tax.

A tax-free holiday weekend is a win-win for businesses and residents. It keeps money in local communities. Also, it encourages residents to shop locally with retailers in their community.

A proven economic stimulus

Local businesses, both big and small, are the backbone of the community. Many local organizations and worthy causes count on their support year-round. Time and again, those local businesses are there to lend their support. Drive by a little league field or attend a charity event. There, you will find the names and logos of many local businesses adorning the outfield wall or program booklet. The lack of a tax-free weekend will not likely cause local businesses to stop giving community support. However, without the economic boon and the activity with a tax-free weekend in place, that support might be a rising challenge.

While mindful of the financial constraints facing the commonwealth, we strongly contend that the loss in these tax revenues pales in comparison to robust economic activity. We respectfully ask lawmakers to keep local retailers in mind, should the financial picture brighten. The chamber, and our retail members, look forward to the inclusion of a tax-free weekend during next year’s fiscal debate and review.

The tax-free holiday is a proven economic stimulus. A healthy retail economy helps to mitigate the hit to the state budget in lost sales tax revenue. In an era when more financial and regulatory hurdles are placed in front of small businesses, the tax-free weekend not only provides a financial benefit but also shows these companies that the state values and appreciates their contributions to the community.