By Paul Tuthill
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Boston, MA – Two days of sales tax free shopping in Massachusetts last weekend was a consumer confidence test. Would people open their wallets and spend in the midst of economic uncertainty and wild stock market swings? Store owners and mall operators reported brisk business, but hard numbers are difficult to come by, as we hear from WAMC's Pioneer Valley Bureau Chief Paul Tuthill.
Shoppers in Massachusetts last weekend spent five times as much money as they would on a normal summer weekend, according to the state's leading retailers' trade group.
Bill Rennie, vice president of the Massachusetts Retailers Association says consumers spent an estimated 500 million dollars during the two days stores did not have to charge the 6 point 25 percent state sales tax on purchases totaling less than 25 hundred dollars.
The 500 million dollars in total sales figure is an estimate based on an informal survey of the trade group's members.
Individual stores are reluctant to release sales numbers. Rennie says the anecdotal evidence suggests that however badly their 401ks may have been hammered in the stock market, people were willing to spend and spend on pricey items.
Just as with the retailer's group, the Massachusetts Department of Revenue can only estimate how much business took place during the sales tax holiday. This is because stores pay the sales tax based on a month's worth of taxable receipts. Sales made on August 13th and 14th will never be reported to the DOR.
Still, DOR spokesman Bob Bliss said the agency is required to file a report with the state legislature, by the end of December, on the impact of the sales tax holiday .
If history is any guide, the DOR's final report on the sales tax holiday will vary little from its preliminary estimate that shoppers will save about 20 point 5 million dollars over the two days.
Critics contend the sales tax holiday does not generate additional business for retailers, but just concentrates during two days purchases people would otherwise make. There is also the argument that it takes away revenue the state sorely needs.
The Massachusetts legislature has authorized sales tax holidays in seven of the last 8 years. The vice president of the retailers association, Rennie, says it has literally become Christmas in August..
As for an economic indicator, the sales tax holiday weekend may mean little. The consulting firm, Mass Insight reported this week that its latest quarterly poll of consumer confidence had fallen to its lowest rating since late 2008.