BOSTON — Gov. Charlie Baker on Wednesday proposed expanding the state’s annual two-day sales tax holiday to a two-month event this year in an effort to supercharge the post-pandemic economy.
The state can afford a 60-day period free of most sales taxes thanks to tax revenues that are almost 15% above projections as well as an infusion of federal coronavirus relief funds, the Republican said at a news conference to announce the legislation.
He estimated an August and September sales tax holiday would save consumers and businesses $900,000.
The state has a 6.25% sales tax on most goods and services.
“This proposal will help taxpayers keep more money in their pockets and encourage more people to shop locally,” Baker said. “It will especially help lower income residents who are the most affected by the sales tax in the first place.”
State tax revenues for the current fiscal year are exceeding projections. Through May, tax collections are almost $4 billion more than the year-to-date benchmark, he said.
In addition, the state’s Stabilization Fund — the so-called rainy day account — is at about $4.4 billion, which is higher than it was at the beginning of the pandemic.
The proposal was welcomed by the state’s retailers.
“A two month sales tax holiday is a smart, exciting, and progressive economic incentive that will benefit our small businesses and our consumers just when they need it,” Jon Hurst, president of the Retailers of Massachusetts Association, said in a statement.
The state’s annual sales tax-free weekend has already been designated as Aug. 14-15 this year. What had been an on-again, off-again event for years was made an annual event through legislation in 2018.
The proposal needs approval in the heavily Democratic Legislature. One Democratic lawmaker is already throwing cold water on the idea.
“Or we could fix the T, repair our crumbling bridges, reduce class sizes, and pay down our debt,” state Sen. Eric Lesser tweeted.
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