Lawmakers: Let Sellers Absorb Sales-Tax Holiday
An attempt to resurrect the 4-year-old holiday — actually a weekend — died last week in the Legislature. The state's seen a massive drop in revenue over the past year because of the economic crisis and passed new legislation to increase the sales tax by 25 percent, up to 6.25 percent from 5 percent, to help plug a billion-dollar deficit going into the new fiscal year.
About $14.9 million in sales tax was exempted last year. There was no way a tax holiday was going to occur this year. But if sellers are willing to absorb the tax cost, why not let them, say legislators.
State Rep. William "Smitty" Pignatelli, D-Lenox, was one of 50 co-sponsors last week of legislation that would allow vendors to advertise that they would pay or absorb the sales tax on purchases.
Under current law, it is illegal for vendors to advertise in this manner. Recent advertising, whether on radio, or through the print media, have been prevalent where vendors announce "We will pay your sales tax" or "Sales tax in on the house." Under Chapter 64H, Section 23 of the General Laws, a $100 fine can be assessed to the vendor for each occasion they advertise this way.
"Many vendors and business owners have approached their elected officials saying they are interested in advertising that they would be willing to pay the sales tax on purchases to entice customers which in turn would increase sales," said Pignatelli. "It shouldn't matter who pays the sales tax as long as it is paid to the commonwealth."
The legislation filed by Rep. John F. Quinn of Dartmouth would repeal Chapter 64H, Section 23. The legislation that was filed with the House Clerk also puts the responsibility on the vendors, who advertise this way, to pay the full amount of the tax due by the purchaser.
"Due to the current fiscal condition of the commonwealth, it was unfeasible to have a sales tax holiday this year," said Pignatelli. "It is our hope that this legislation will attract consumers with tax discounts on purchases that ultimately will be absorbed by the vendor."
Update: The House leadership isn't backing the bill so it's unlikely to pass in time for an August sales weekend.