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ACTION ALERT: Tell Your Legislators to VOTE NO on the Sales Tax Holiday

July 25, 2011 By Harmony Blakeway

[Cross-posted from ONEMassachusetts.org]

Last Friday, the Legislative Leadership decided to stage the annual summer debate around a sales tax holiday. The bill, filed by Senator Hart, will be heard by the The Joint Committee on Economic Development and Emerging Technologies today, Monday July 25th, at 11:00am [Hearing Details] [PPI Executive Director, Judy Meredith’s Testimony].

Over the weekend Legislators called our staff, urging the ONE Massachusetts network to mobilize against Sales Tax Holidays. (Your great work around the Act to Invest in Our Communities and our Summer Campaign Launch to urge local activists to meet with their legislative delegation has been noticed!!)

Below you will find some excellent facts and talking points that you may find helpful in a 5 minute conversation with your legislators.

CALL TODAY – URGE YOUR LEGISLATORS TO:

  • VOTE NO on Sales Tax Holidays
  • Ask Leadership to stage a full and fair debate this fall around progressive tax reform.

We anticipate the House and Senate voting on the Tax Holiday on Tuesday or Wednesday (because by law they are recessed on July 31 till the fall). Clearly this is an opportunity to influence our legislators before they pass bad tax policy.

JUST THE FACTS

Massachusetts Budget and Policy Center

According to the Massachusetts Budget and Policy Center,

The Governor and Legislature have now finished work on a budget for Fiscal Year (FY) 2012 that addresses [a state facing gap of close to $1.9 billion], primarily with a combination of cuts and reforms. [Full Report]

Mass Department of Revenue

Research by our state’s own Department of Revenue on the 2009 Sales Tax Holiday found,

The amount of forgone sales tax revenue was approximately $19.9 million. DOR estimates that this forgone revenue had no impact on the MBTA State and Local Contribution Fund, but impacted the amounts going to the School Modernization and Reconstruction Trust Fund ($3.2 million), Commonwealth Transportation Fund ($1.2 million), and Substance Abuse Fund ($0.5 million).

The Institute on Taxation and Public Policy

The Institute on Taxation and Public Policy included these facts (and others) in their list of problems with the Sales Tax Holiday Approach [Full Report]:

  • If the goal is to provide tax relief to the low-income families for whom sales taxes are most burdensome, sales tax holidays are poorly targeted, providing tax breaks to even the wealthiest taxpayers.
  • Many low-income taxpayers spend most or all of their income just getting by – which means that they have less disposable income than wealthier taxpayers. These taxpayers may not have the luxury of shifting the timing of their consumption to coincide with week-long sales tax holidays.
  • Unscrupulous retailers can take advantage of this shift in consumer behavior by increasing their prices (or failing to reduce them by the full amount of the sales tax break) during the tax holiday.
  • Revenue lost through sales tax holidays will ultimately have to be made up somewhere else, either through painful spending cuts or increasing other taxes.

The Tax Foundation Logo

Even the Tax Foundation (a fiscally conservative organization) has come out against the Sales Tax Holiday, citing these (among other) reasons [Full Report]:

  • Sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of purchases. Some retailers raise prices during the holiday, reducing consumer savings.
  • Sales tax holidays create complexities for tax code compliance, efficient labor allocation, and inventory management. However, free advertising for what is effectively a paltry 4 to 7 percent sale leads many larger businesses to lobby for the holidays.
  • Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating between products and across time, and distorting consumer decisions.

Massachusetts Taxpayers Foundation

A good summary of the overall picture of Sales Tax Holidays comes from Massachusetts Taxpayers Foundation president, Michael Widmer:

The expense makes the holiday a frivolous, feel-good measure, at best, during good fiscal times… it would be a poor investment during what will be the fourth straight year of state budget cuts. He concedes there’s a modest economic stimulus, although he says many of the tax-holiday purchases would have happened anyway at other times of the year. [Full Article: GateHouse News Service]

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Filed Under: User Tagged With: budget-priorities, massachusetts, revenue-policies, sales-tax, state-budget, taxes

Comments

  1. Sondra says

    July 25, 2011 at 12:31 pm

    Never let it be said that the Joint Committee on Economic Development and Emerging Technologies will let the facts get in their way when they vote on the sales tax holiday bill. Was just at the hearing for a few of the pro-sales tax holiday supporters and was disappointed at the unreality-based testimony and the acceptance by the Committee members.

  2. carmen says

    July 25, 2011 at 4:33 pm

    Just learned from SHNS that the lawmakers on the Joint Committee on Economic Development and Emerging Technologies approved today the Sales Tax Holiday. A spokesman for Governor Patrick said today the Governor intends to sign the bill if the House approves the bill this week.

  3. AmberPaw says

    July 25, 2011 at 5:30 pm

    My least favorite of those so-called reforms is the expansion of staff attorneys at the cost of the independent contractor attorney.

    This about it. With independent contractor attorneys, you pay only for time worked. With staff, if there is not enough work to keep the staffer busy for 37.5 hours a week (THAT is considered full time) the taxpayer pays 100 salary and benefits anyway.

    Hiring 250 attorneys (or more) and 150 staff (or more) and causing private attorneys to layoff secretaries and paralegals and downsize is going to both cost MORE and hurt local economies all across the state. Wonder how many jobs in the dreaded private sector this “refurm: will destroy?? No one studied it at all, not one hearing either.

  4. Tyler O'Day says

    July 25, 2011 at 11:49 pm

    mhm

  5. judy-meredith says

    July 26, 2011 at 12:50 pm

    First time on my hand held this morning, — second time just now thinking I could “unthumbsdown”, but I can’t … sorry Tyler.

  6. Tyler O'Day says

    July 26, 2011 at 5:31 pm

    sorry

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