The speaker and Senate president made clear this week that a gas tax suspension isn’t in the cards, but people in Massachusetts will get at least some form of tax relief this summer regardless.
The “grand bargain” that legislative and administration leaders agreed to in 2018 made a sales tax-free weekend an annual holiday and calls for the Legislature by June 15 to choose a weekend that the state will give up tens of millions of dollars in taxes in a bid to spur buying and consumer savings.
If lawmakers don’t, the Department of Revenue will announce by July 1 which weekend in August it will suspend the 6.25 percent sales tax on most items up to $2,500.
Massachusetts has had a sales tax holiday weekend most years since 2004 and while critics have knocked the idea as a gimmick that just shifts when people make purchases, it is likely to be a popular topic on Beacon Hill this year as residents contend with sky-high gas prices and persistent inflation while the state sits on a glut of tax revenue. Eliminating the sales tax would provide some immediate relief for consumers – the 6.25 percent sales tax on an item that cost a maximum of $2,500 would be $156.25. The sales tax, and therefore its suspension, does not apply to sales of gasoline, however.
In a similar position last year but without as intense inflation, Gov. Charlie Baker proposed a two-month sales tax holiday in August and September, saying it would help give the state’s economy “some momentum as we come out of this sort of pandemic doldrums that we’ve been in.” Legislative Democrats slammed the idea and instead stuck with the prescribed two-day version.
Massachusetts has long offered the tax holiday during a summer weekend as a way to boost local businesses, though it did not have one in place in 2016 or 2017. In 2018, the dates weren’t officially set until one day ahead of time.
The first was a single-day holiday, held Saturday, August 14, 2004, and authorized by an economic stimulus package signed into law the previous November by Gov. Mitt Romney. The first sales tax holiday was estimated to have saved consumers about $10.1 million, the News Service reported, and the House chairman of the Revenue Committee, Rep. John Binienda, said retailers that day “did Christmas Eve numbers in August.”