This upcoming weekend, shoppers in Massachusetts will be able to purchase products under $2,500 without paying the state’s five percent general sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. . This is because Massachusetts is one of 14 states and the District of Columbia that will hold “back to school” sales taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. holidays in 2006. A new Tax Foundation study outlines the growth in sales tax holidays and points out some of their shortfalls from a public policy perspective.
Interestingly, Massachusetts’ neighbor, New Hampshire does not have a statewide sales tax, so shoppers have a perpetual tax holiday. In the spirit of competitiveness, New Hampshire is gearing up to promote their year-long tax-free shopping to residents of Massachusetts. From State Tax Today:
“While Massachusetts prepared for its second annual sales tax holiday — set for August 12 and 13 — New Hampshire again took some time and money to remind Bay State shoppers that they never have to pay a sales tax north of the border.
In the week preceding Massachusetts’ touted tax break, the New Hampshire Division of Travel and Tourism Development kicked off a $40,000 campaign on August 6 to advertise through major newspapers, e-marketing, and notices at the state’s welcome centers to get the message out to consumers.
“We want to let our neighbors in Massachusetts know that they don’t have to schedule their shopping or their holidays around the schedule of state government in Massachusetts, because in New Hampshire, every day is a sales tax holiday,” said New Hampshire Gov. John Lynch (D).”
It’s time for lawmakers to reject the gimmick of sales tax holidays and support long-lasting tax relief for all weary taxpayers. If tax relief for consumers looks good for a weekend, why not follow New Hampshire’s lead and give it to them all year long?
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