This weekend marks the annual sales tax holiday in Massachusetts, when many items under $2,500 are exempt from the 6.25% surcharge.
Diana Szynal is the president of the Springfield Regional Chamber, a business group. She said many retailers are getting creative in trying to attract shoppers.
"Some of the smaller, locally owned businesses do a really great job of outreach ahead of this weekend, things people can do maybe around pre-shopping, that sort of thing, that allows them to really attract people in for the weekend," Szynal said.
Certain items, such as alcohol, tobacco and marijuana are not eligible for the holiday. And groceries and clothing are not subject to the sales tax in Massachusetts at all times.
The initiative does come with a price. It's estimated that the tax-free weekend cost Massachusetts state government about $36 million in uncollected tax revenues last year.
Marco Guzman is a senior policy analyst with the Institute on Taxation and Economic Policy. He said revenues forfeited because of sales tax holidays could be sorely missed by state governments right now.
"We have states that are beginning to struggle with some of the revenues and budgets that they're seeing now a days now that their budgets aren't kind of buoyed by the post-pandemic relief," Guzman said.
ITEP estimates sales tax holidays will cost states $1.3 billion in lost revenue this year.
Guzman also said research suggests sales tax holidays don’t provide the intended benefits to those with lower incomes, as they often have less financial flexibility to time purchases to when the events take place. He also said a temporary tax break does not provide a long-term financial break for those who need it.
He added retailers sometimes water down their deals or raise prices when the sales tax is not being collected.
In Massachusetts, legislation in 2018 made a sales tax-free weekend permanent after differing iterations dating back to earlier in the century. It is up to lawmakers to schedule the event each year.
Some legislators argue that holding the holiday in August, when business is sometimes slow, can provide a shot in the arm to retailers.
