Retailers Prepare for Tax-Free Weekend – Expect Short-term Gain

Many politicians consider the sales tax holiday a gift to retailers and consumers — even though states can lose millions of dollars in revenue. As Massachusetts prepares for its tax-free weekend, NEPR’s Karen Brown looks at what businesses expect to gain.

By midweek, Manny’s TV and Appliances in Hadley was already seeing crowds pulled in by the tax holiday. Customers could reserve their purchase until the weekend, when credit cards would go through without the state’s 6.25 percent sales tax. As Debbie Benoit pre-orders her new fridge, store manager Jim Bertier turns his computer monitor to face her — that way, she can watch him erase the sales tax number from the screen.

“Oh! $173 dollars.”

Benoit was also considering a new stove — though the purchase wasn’t inspired solely by the tax holiday. 

“I was going to buy it, ” she said, “but this prompted me to buy it sooner than later.”

And that’s one reason economists have questioned the usefulness of tax holidays. Although 18 states have scheduled them this year, a new report from the nonpartisan Tax Foundation says they create administrative hassles without boosting overall sales. Even Jim Bertier of Manny’s doesn’t expect a longterm benefit.

“It’s a big increase for  the week but not the for month, and definitely not for the year,” he said. “But i can see why people  shop this time.”

The Tax Foundation also found that some retailers actually raise prices on tax-free days. And Massachusetts legislator Steven Brewer, who supported the holiday, is only lukewarm about it.

“I don’t thik it’s a great thing, but i think it’s a good thing.,” he said. “I think it energizes the consumer.”

Certainly some retailers think it’s a great thing. Neil Lacomb of Sears in Hadley says it’s his best two days of the year.

“I hire a lot more staff. I do a lot more advertising,” he said.

The tax waiver in Massachusetts applies to purchases less than 25-hundred dollars. Later this month, Connecticut offers a tax-free week, but only for clothing and footwear up to 300 dollars.