Business

Tax rollercoaster takes Bay Staters for ride

Chris Weiss, left, and Tyler Hardie, right, sales associates at the Westfield Walmart, carry a large screen television to a display area of Walmart in preparation of the upcoming tax-free weekend August 10 and 11. (Photo by Frederick Gore)

Chris Weiss, left, and Tyler Hardie, right, sales associates at the Westfield Walmart, carry a large screen television to a display area of Walmart in preparation of the upcoming tax-free weekend August 10 and 11. (Photo by Frederick Gore)

WESTFIELD – Much ado has been made over the upcoming sales tax holiday weekend set for August 10-11, and rightfully so.
Massachusetts consumers are set to save millions on large items that will impact their lives in numerous ways: a new television to watch the Patriots and Red Sox this fall, a snowblower to keep their driveway clear this winter, or a new mattress for their growing son or daughter.
However, as consumers are discovering, the state’s tax holiday comes at a strange moment in Massachusetts politics, as it comes on the back of an increase in the state’s gasoline tax, as well as the implementation of a puzzling software tax.
The gas tax, which rose by 3 cents a gallon to 26.5 cents a gallon, which includes a 2.5 cent surcharge for the cleaning underground fuel storage tanks, is expensive but reasonable, as the majority of the state’s six million residents reside in Greater Boston and thus can utilize mass transit to avoid the tax if they so choose, the same mass transit system which many of these taxes will be put towards improving and renovating.
Even still, the increase of price at the pump is going to put a slight damper on retailers during what would be an otherwise win-win weekend for producer and consumer alike.
“With any increase, we’re going to take it from the bottom line,” said Joe Noblit of Westfield, owner of Yankee Mattress in Agawam. “We hire an outside contractor to move our mattresses, and they set their own rate.”
Noblit believes that the biggest effect the Commonwealth’s exorbitant gas tax will have on the upcoming weekend will be on the mindset of the consumer, which will in turn affect how they spend their money.
“It’s a psychological thing,” Noblit said. “The consumer feels once again like they are getting pinched. We will definitely see it come out of our bottom line.”
Other retailers such as Lumber Center in Westfield were in for a big surprise on the sales tax holiday when delivering their goods to customers.
“I didn’t even know there was an increase,” said a sales associate for the Broad Street retailer.
When asked of whether the tax would negate some of the business his store would otherwise be receiving, the associate was quick to dismiss the notion.
“It’s still going to be a pretty busy weekend, busier than most.” He said.
The timing of the state’s gas tax increase during the busy summer monthes, when families are traveling to beaches, ballgames and on vacations, is simultaneously frustrating and somewhat understandable.
But it is Beacon Hill’s implementation of a software tax on Wednesday that has everyone from software companies and consultants to consumers up in arms all across Massachusetts.
The tax is designed to bring in around $160 million in revenue according to Senate Committee on Ways and Means Chairman Stephen Brewer (D-Barre).
“It was our assessment that was a reasonable, blended approach for a statewide solution,” Brewer told the media this week. “Any tax increase we would have undertaken would have been unpopular with whatever specific segment it’s affecting. It’s never a pleasant exercise to raise revenue, but from time to time, it is necessary.”
That doesn’t sit well with Westfield City Councilor David Flaherty.
“Gas taxes will go up by 14.2 percent. Cigarette taxes will go up by 39.8 percent. Computer services will now be taxed at 6.25 percent. These are absolutely offensive increases in the burdens placed on citizens and businesses,” Flaherty said.
The City Councilor went on to describe how he called the state’s Department of Revenue (DOR) with questions regarding his computer services company, DFA Group, LLC.
“I called Mass DOR yesterday to get answers about what is actually taxable and what is non-taxable. They didn’t have the answers,” said Flaherty. “They suggested that I ‘check the FAQ web page in a few weeks’. Within the next few weeks, I’ll have sent out hundreds of invoices. Do they expect me to reinvoice everyone after they post their FAQ’s?”
“This tax not only hurts business that hire computer professionals, but it places Massachusetts companies at a disadvantage when compared to neighboring states, and it places new bureaucratic burdens on computer businesses,” he said.
To Flaherty, the tax is a perfect example of the Statehouse cutting off it’s nose to spite it’s face, taxing one of the most important segments of the state’s economy in an effort to increase revenue for the Commonwealth’s general fund, much of which will be used to aid the Massachusetts Bay Transportation Authority, while the Boston transit system reported record fare revenue this week.
“It’s an unfair burden. We’ve never had to pay a service tax in Massachusetts,” Flaherty said. “If you go to the doctor or even to a barber, those services are already taxed. You would end up paying double the taxes.”
Flaherty’s plight is being felt by software companies all over the state, as he is being forced to send out bills to customers today with a disclaimer indicating further fees may need to be incurred as per DOR regulations.
“Is it just labor? If I send someone to fix a computer, what is taxed? I couldn’t get those questions answered.” said Flaherty, whose Westfield-based company employs seven workers and has a customer base of around 1,200. “They’re hitting a very important industry to Massachusetts with this tax. 6.25 percent is a lot of money.”
The DOR says it is getting a lot of questions about what it all means and expects to provide “further guidance” in the future after taking public comment and meeting with affected industries.
Lawmakers have said they expect the tax to generate $161 million in new revenue.

Travis Modlish, a sales associate at Westfield Home and Garden / Agway on Route 20 in Westfield, arranges a row of snow blowers and other lawn and tractor equipment in preparation of the upcoming tax free weekend Aug 10 and 11. The sales-tax free holiday weekend applies to retail sales excluding any single item priced higher than $2,500. (Photo by Frederick Gore)

Travis Modlish, a sales associate at Westfield Home and Garden / Agway on Route 20 in Westfield, arranges a row of snow blowers and other lawn and tractor equipment in preparation of the upcoming tax free weekend Aug 10 and 11. The sales-tax free holiday weekend applies to retail sales excluding any single item priced higher than $2,500. (Photo by Frederick Gore)

Brian Kelly will be spending all of next week in preparation for a storm, and not a storm that will require raincoats and wading boots.
Rather, the storm will be taking place inside his Route 20 Agway store, as sales tax-free weekend will be hitting Westfield in a big way on the weekend of August 10.
Kelly, the store’s General Manager, is no stranger to this holiday, an event which has occurred 8 of the past 9 years in the Commonwealth.
“It’s always a good weekend, lots of big ticket items being moved,” Kelly said. “Lots of tractors, snow blowers, stuff like that.”
Kelly says that the amount of commerce his store receives during this holiday every year is always steady.
“People start planning to buy the big ticket items in advance,” he said. “They know and expect it (tax free weekend). People even buy a lot of heating products like wood pellets, even though they are tax-free year round.”
The 6.25 percent sales tax will be lifted on numerous items, including gas, cigarettes, restaurant meals, and vehicles including cars and boats. Items that exceed $2,500 will not be tax-free, but will instead have $175 shaved off its price tag.
A fixture in only thirteen states nationwide, the impending holiday is impacting the mindsets of shoppers in Greater Westfield, especially those who frequent major retailers such as Home Depot and Walmart.
Home Depot is hosting a Kitchen Design Clinic on the evening of Friday, August 9 that they hope might inspire people who attend to come back for the weekend and buy tax free.
Home Depot is also offering free shipping on patio supplies that weekend.
Curt Gozotis of Westfield, was leaving the parking lot of the Route 20 Home Depot when he proclaimed, “Of course I’ll be back for tax free weekend.”
“I have a few apartments I want to clean up in Westfield,” he went on to explain. “I want to get new, energy-efficient appliances for them and I know I’ll definitely save money buying the supplies.”
It is these big ticket items that Bay Staters are expected to purchase the most of, with experts estimating Massachusetts shoppers will save in the ballpark of $20 million.
Some shoppers seem rather blasé about the upcoming festivities.
“I don’t think people consider it too much,” said John P. Scully of Westfield. “If stores are concerned that they should give people a break; sales and deals, stuff like that”.
Kelly Moore of West Springfield was shopping at Agway this week and said, “I forgot all about it. I don’t think I’ll be looking for anything except maybe back-to-school shopping for my kids”.
A stone’s throw east on Route 20, Scott Ring, the manager of the Westfield Wal-Mart, is preparing to move a whole lot of school supplies, as well as televisions and computers during what he anticipates to be a busy weekend.
“The timing is perfect, because a lot of people are doing back-to-school shopping, so people are also filling carts with small items’ too. Large TVs, computers, all the big ticket items are what people will be going for,” Said Ring, who hails from Arkansas and managed Walmarts throughout the southern United States before a promotion brought him to Westfield.
When asked as to whether or not other taxes imposed by Beacon Hill such as that on gasoline will affect his store’s business, Ring said he wasn’t sure but, having managed the Walmart in Northampton and now Westfield, Ring is no stranger to sales tax weekend, and doesn’t anticipate any massive departure from the normal crowds.
“It’ll be about average,” Ring said, smiling at the irony of his statement when describing what is almost certainly his store’s busiest weekend of the summer. “The first of the month and around the fifteenth, we get lots of business because people have money in their pockets. So this (tax free weekend) comes at a good time.”

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