The irony in listening to legislative debate about establishing a “sales tax holiday” is lawmakers seem to forget tax exemptions are granted all the time, just not directly to consumers.
Lawmakers held spirited debate about the Columbus Day weekend holiday last week. (One even sang the Marden’s jingle to make her point.) Arguments fell along two lines: those who think the holiday would be good for business and consumers, and those who think it’s a shoddy, expensive gimmick. They’re both right.
But neither side has the evidence to prove their point. Despite repeated claims by tax policy wonks that holidays are the worst idea since New Coke, some 97 million people still live and shop in states that now offer one, including Massachusetts and Vermont.
Proponents of holidays, such as the National Retail Federation, boast of their psychological effect on shoppers. But on the financial side, they’re rather silent.
Finances, though, make opponents crow. The fiscal note for Maine’s bill is $6.5 million, which seems to project more than $100 million in sales would occur over one weekend. Somehow, this seems high. But man, we hope that projection is right.
We don’t know if it is. Neither should lawmakers, though many seem inclined to engrave its expense as the holiday’s epitaph. Well, our solons weren’t agreeable to a holiday when the state had money, so it’s predictable they’re less agreeable when it doesn’t.
We support the sales tax holiday because it’s neither angel nor devil. It’s a gimmick, yes, but one hurting Maine retailers could use. (If holiday is the wrong word, then call it stimulus.) We encourage reticent lawmakers to consider restricting its terms as a compromise, instead of rejecting it outright. Other states offer their holidays for finite items, such as clothes, computers or back-to-school items, for example. So could Maine.
The holiday the state is considering — the cap is $2,500 — is as a broad as could be. It’s parallel with our neighbors (Massachusetts is $2,500, Vermont is $2,000 and New Hampshire, as we all know, makes every day a sales tax holiday) but if that’s too much to take, trim it back and decrease the heinous fiscal note.
Will it cost Maine tax revenue? Yes. Will it boost sales in Maine businesses during this downturn and provide relief to consumers in a state with lower-than-average incomes and rising unemployment ? Yes. We can go around and around on the relative merits and drawbacks of each point for hours. (Which lawmakers have already done.)
If the state will break for business, it should break for consumers. If so worried about the cost, make the terms more palatable. This is only a pilot program, after all. There is no precedent to follow — feel free to make one. Then, lawmakers should pass the holiday into law.
We’ll figure out who’s right, after it’s over.
editorialboard@sunjournal.com
Send questions/comments to the editors.
