A Massachusetts organization representing the interests of retail store owners filed four potential ballot questions with state Attorney General Maura Healy, proposing combinations of sales tax relief and sales tax exemptions.
The Retailers Association of Massachusetts (RAM) submitted the four potential ballot initiatives on August 2.
Healy approved all four questions’ language on September 6. RAM has not yet decided which question it will collect signatures to place on the November 2018 ballot.
Depending on RAM’s decision, voters could see a question asking for reductions in the state’s 6.25 percent sales tax to either 4.5 percent or 5 percent, or a question coupling a sales tax reduction with an annual sales tax holiday weekend.
After choosing which ballot initiative to offer, RAM will have to collect at least 64,765 signatures by December 6.
Russell Sobel, an economics professor at The Citadel, says sales tax holidays shift existing spending instead of creating new spending.
“Rather than stimulate new sales, sales tax holidays incentivize consumers to shift the timing of their purchases,” Sobel said. “It may be that retail spending is higher than normal during the sales tax holiday, but it is not necessarily the case that total retail spending for the year is higher. Spending is just transferred to that weekend from other periods.”
‘Somewhat of a Distraction’
Dylan Grundman, a senior policy analyst at the Institute on Taxation and Economic Policy, says sales tax holidays are an ineffective gimmick.
“Sales tax holidays do not grow the economy, improve businesses, or do a whole lot for the families they are designed to help,” Grundman said. “They are somewhat of a distraction.”
Comprehensive tax and spending reform is more beneficial to taxpayers than sales tax gimmicks, Grundman says.
“States should be spending their time exploring real, comprehensive tax reform, looking at the spending side of the budget, and making sure they are allocating their resources as effectively as possible,” Grundman said.
“The best tax code for a state is one that is adequate to fund the services the residents and businesses rely on, fair, easy to comply with, transparent, and understandable,” Grundman said.