Holiday comes early
Some businesses offer promotions ahead ofmass. taxfree weekend
Two weeks before the state approved a sales tax holiday, Jordan’s Furniture began airing commercials touting an aggressive promotion to lure customers: Come in now and we’ll double the sales tax discount.
Now, with the weekend of taxfree shopping set for Aug. 10 and 11, a handful of other furniture stores have announced the same promotion. Rotmans in Worcester took it a step further, tripling the discount.
“We did it, and within three days, everyone has done it, too,” said Eliot Tatelman, Jordan’s president and chief executive. “It’s a very competitive industry, and it’s perfect for sales tax holiday.”
These early promotions are a sign of the tax holiday’s popularity with shoppers and the importance of the late summer weekend to retailers, many of which say those are the best two days of sales during the year.
Electronics, department, and other stores will offer their own promotions to feed what has become an annual shopping frenzy.
The Retailers Association of Massachusetts, a trade group, estimates consumers spend more than $500 million in the state on a tax-free weekend.
“The customer feels pretty strongly that the sales tax is an irritant. They would rather not have it,” said Steve Rotman, president of Rotmans furniture store. “When the state approves a sales tax holiday, people voice that opinion by buying.”
The Legislature on Tuesday approved the tax-free weekend and Governor Deval Patrick signed the bill into law Friday. It eliminates the 6.25 percent on purchases under $2,500, excluding utilities, cars, boats, and meals.
Critics question whether the holiday is worth the loss in tax revenue, estimated at about $23 million last year, for no real economic benefit. Studies have shown that tax holidays don’t generate additional consumer spending; customers merely shift purchases they would have made at another time to the tax holiday.
But retailers argue that extra staffing they put in place over the weekend produces additional income taxes for the state. The flood of shoppers also boosts sales at businesses such as restaurants, which still must collect taxes.
Jon Hurst, president of the Retailers Association of Massachusett s , said the holiday benefits retailers by retaining sales that would otherwise be lost to taxfree New Hampshire or the Internet.
He added that early promotions that attract customers to furniture stores before the tax holiday also add to state revenue, since sales tax is collected from these purchases.
During the tax-free shopping weekend, for example, Jordan’s will offer an extra 6.25 percent discount in addition to the omitted sales tax. In the weeks leading up to the event, when sales tax is required, the company still offers a 12.5 percent discount, but absorbs the entire cost.
One incentive for furniture businesses to extend the tax free discount is that it allows consumers to trickle in instead of bombarding the stores all at once. “We take a lot of pride in the way we take care of consumers,” Tatelman said. “When the store is that busy on Saturday and Sunday, we absolutely don’t do our customers justice.”
Hurst said more retailers are willing to absorb the extra discounts to attract more customers amid a lackluster economy. US retail sales, excluding vehicles, climbed just 3 percent in the first six months of the year compared to the same time period a year ago, according to the Commerce Department.
“A lot of retailers are chasing after those somewhat limited consumer dollars,” said Hurst, “and consumers have so many different options today.”
‘A lot of retailers are chasing after those somewhat limited consumer dollars, and consumers have so many different options today.’
JON HURST, Retailers Association of Massachusetts