With Massachusetts on track to end the year with a multi-billion dollar surplus, Gov. Charlie Baker on Wednesday proposed a two-month sales tax holiday that would give consumers a break from the state’s 6.25% sales tax in August and September in an effort to drive shoppers to local businesses.
The major tax relief proposal would cost the state an estimated $900 million in forgone revenue, but the Republican governor said it would also be a way for the state to show appreciation to business owners and consumers who have contributed to the surplus by finding ways to support each other during the COVID-19 pandemic.
“It would be a really big deal, not just for taxpayers, but also for all those Main Street businesses have really had it probably toughest of all on the economic side since the beginning of the pandemic,” Baker said at a State House press conference.
Baker said he would file legislation Wednesday to expand the annual sales tax holiday from a two-day weekend in August to a two-month event, believing 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.”
To take effect, the proposal would need to get through the Democrat-controlled legislature where lawmakers in both the House and Senate were already questioning the governor’s decision to prioritize tax relief over investments in things like student debt relief or public transit.
As it stands now, the tax-free holiday has been set for the weekend of Aug. 14 and 15.
The traditional August sales tax holiday applies to purchases under $2,500, and does not extend to meals, motor vehicles, boats, telecommunications services, utilities, tobacco, marijuana or alcohol.