, Derry, New Hampshire

August 9, 2012

Editorial: Bay State's destructive tax system a boon to NH

Derry News

---- — New Hampshire is lucky to have fools for neighbors.

We’re talking about the fools on the hill, Beacon Hill.

Last week, just before they punched out for the rest of the summer, Massachusetts legislators decreed another “Sales Tax Holiday” for this weekend.

The last-minute vote left little time for Bay State merchants to prepare for or promote the event. But at least for these two days people shopping in the Bay State won’t have to pay the onerous 6.25 percent sales tax that applies to just about everything except food and clothing (unless the article of clothing costs more than $175).

The first sales tax holiday was decreed in 2004, a one-day event intended to stimulate retail business in a down economy.

The pity, at least from the Bay State’s point of view, is that by then there were so few retail businesses left to stimulate on the Massachusetts side of the border.

Since it adopted its general sales tax in 1966, the Bay State has seen much of its retail base decamp to New Hampshire, where every weekend — in fact every day — is a sales tax holiday.

The retail centers that grew up along the Route 28-Interstate 93, Route 125 and Route 3 corridors of New Hampshire are testimony to the destructive effects of Massachusetts tax policy.

The Massachusetts Legislature has decreed a sales tax holiday or weekend every year since 2004. Except that is, in 2009, when the solons not only decided the state couldn’t “afford” to lose the money but also raised the tax by 25 percent -- from 5 cents on the dollar to 6.25 cents.

Last year, shoppers saved an estimated $21 million in sales taxes during the two-day tax holiday, according to the Massachusetts Department of Revenue. That means retailers took in more than $330 million that weekend.

Eighteen states have declared sales tax holidays this year, according to the Tax Foundation, a nonprofit, nonpartisan tax research organization based in Washington, D.C.

But a special report by the foundation concludes that such tax-free days do little to stimulate the economy as consumers simply time their purchases to take advantage of the temporary tax break.

“Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief,” the report states. “If a state must offer a ‘holiday’ from its tax system, it is a sign that the state’s tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round.”

Fat chance of that. Bay State legislators have resisted calls even to make the sales tax holiday permanent despite the obvious benefits for its shoppers and merchant.

Bay State voters, meanwhile, keep re-electing those legislators. In fact, two years ago, they bought their leaders’ argument that rolling back the sales tax to 3 percent would cause untold havoc and let it stand at 6.25 percent.

It’s good to have neighbors like that. New Hampshire will be glad to welcome them back to continue their sale-taxless shopping on Monday.