WESTFIELD – Don’t be surprised to see state Rep. John C. Velis looking in store windows over this upcoming tax-free weekend.
The two-day tax holiday, set for Aug. 17 and 18, will allow shoppers to avoid paying the 6.25 percent sales tax on most retail items that are less than $2,500, excluding food and drink at restaurants.
“I will certainly take a walk downtown and see what’s out there that I might buy,” Velis said. He admitted that he’s not much of a planner when it comes to shopping, saying he is more likely to start shopping for presents at 4:30 to 4:45 p.m. on Christmas Eve. But, he said he is “absolutely” in favor of the sales tax holiday.
“People talk about some of the revenue the state will lose, but if it ends up in the pockets of Massachusetts residents and consumers, it’s a good thing to err on the side of taxpayers,” Velis said.
The “people” he mentioned are critics of the tax-free weekend. According to a story by Chris Lisinski in the State House News Service, the tax pause carries a significant price tag with it. The Department of Revenue estimated that the state forewent between $16.7 million and $37.7 million in tax revenue over the two-day holiday last year.
As a result, based on the midpoint between those figures of $27.2 million, Dept. of Revenue Commissioner Christopher Harding said the MBTA and School Modernization and Reconstruction Trust Fund — which receive a dedicated portion of the state’s sales-tax revenue each year — each missed out on about $4.3 million in potential funding in 2018.
Also, the Institute on Taxation and Economic Policy said in a July report that the benefits from sales tax holidays are “minimal,” saying the benefits disproportionately benefit already-wealthy taxpayers and cost crucial revenue that will need to be made up elsewhere.
“In the long run, sales tax holidays leave a regressive tax system unchanged, and the benefits of these holidays for working families are minimal,” the ITEP wrote. “Sales tax holidays also fall short because they are poorly targeted, cost revenue, can easily be exploited, and create administrative difficulties.”
Velis said the $38 million that the state might lose in revenue, stays in the pockets of taxpayers, and not having to pay the 6.25% sale tax is an additional incentive to make purchases. He also said that August is typically a slower month for retail shops, and this weekend will provide a stimulus for them.
“I’m happy for the small businesses,” Velis said.
The representative also said that he is glad that the tax-free weekend is now permanent.
“Before, every year around June and July, I’d get calls from the Chamber of Commerce and businesses as to whether the date had been set yet. Making it permanent allows businesses and consumers to plan,” Velis said.
The sales tax holiday was made permanent last year in a so-called “grand bargain.” According to the State House News Service, In May 2018, the Democrat-led Senate voted against a sales tax holiday, with some members saying the lost revenue could be used for important needs such as education and roadway maintenance.
Later that summer, facing a potential ballot question that would have reduced the sales tax to 5 percent and likely cutting revenue by more than $1 billion, legislative and administration leaders agreed in the so-called “grand bargain” not to lower the sales tax but to suspend it for one August weekend every year.
“Time and time again, folks in government do these things without giving people affected by it enough time to plan. It’s always going to be around now,” Velis said.
And, according to Velis, the state can afford it. “I think we’re in a good position for right now. Revenue is strong,” he said, adding that he wants to see the effect over time of the marijuana revenue. “I have a lot of good ideas,” he said.
Velis also wants to see gaming legislation in the state, which was legalized by the U.S. Supreme Court two years ago, “Massachusetts hasn’t enacted anything yet. We’re leaving a lot of revenue on the table,” he said.
“We are in a strong position. We have a strong budget,” Velis said, calling the tax-free weekend “a win-win all around.”
“The state will be just okay,” Velis said.