Boston Globe Cites Tax Foundation Sales Tax Holiday Study

 
 
August 16, 2011

"The folly of easy solutions"

By Tom Keane

...

At home, Massachusetts has just ended a tax-free weekend, a (mostly) annual gift from the Legislature whose main purpose, it seems, is to make residents wonder why they shouldn't move to New Hampshire. The illusion of the tax-free holiday is that we can both have taxes and not have taxes.

This year, 17 states will have sales tax holidays, which are wildly popular. Retailers use them to pump up sales while politicians claim to their constituents they are helping their pocketbooks. The problem is that such holidays are a gimmick. Studies suggest they do little to increase overall retail sales (they just change the timing of those sales), they don't save consumers much (retailers often just raise prices during the holidays), they impose a significant cost on state budgets (the estimate is that up to $25 million will be lost in Massachusetts), and, as the nonpartisan Tax Foundation points out, they "distract policymakers and taxpayers from genuine, permanent tax relief.'' If the sales tax rate is too high, by all means reduce it year round. But in fact, two years ago we actually increased our sales tax by 25 percent. Bay State pols are just trying to have it both ways.

[Read the rest.]

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