Bouquet of state tax hikes
On August 1, Massachusetts will take a bigger tax bite from consumers, as new state taxes and tax increases take effect.
A 25 percent hike in the state sales tax, from 5 to 6.25 percent, is the first sales tax increase in 33 years. The other "first" of significance to many Massachusetts consumers is a new 6.25 percent state sales tax on the retail purchase of beer, wine, and alcohol.
And in addition, the state's fiscal year 2010 (FY10) budget, signed by Gov. Deval Patrick on June 29, includes provisions to increase the state's meals, hotel, and satellite television taxes.
The FY10 budget also calls for local taxation of poles and wires owned by telephone and telegraph, cable television, Internet, data service and other telecommunications corporations and located on public ways.
The state senate estimates the increased sales tax will generate an additional $633 million in revenue. Some current exemptions will remain, such as purchases of individual items of clothing that cost $175 or less, and the sale of food, other than restaurant meals.
Sales before the sales tax increase
The Boston Globe reported Monday that some worried merchants struggling with sluggish sales are rolling out discounts and advising consumers to make big purchases before the August 1 sales tax increase.
Here, Oak Bluffs businessman and selectman Ron DiOrio is looking at the sales tax increase from a different perspective.
Mr. DiOrio is the co-owner of Craftworks on Circuit Avenue in Oak Bluffs with Paula Catanese. When asked whether they plan to hold any big sales in anticipation of the sales tax increase, the answer was no.
Instead, Mr. DiOrio explained, "For the balance of the year and probably through next year, we're going to continue to tax at 5 percent, and I'm going to eat the additional one percent, as the cost of doing business."
In light of this year's recession, the state is not likely to offer consumers what has become an August tradition over the past several years, a traditional tax-free holiday in August. Staff in the state's executive office for administration and finance and in Senate President Therese Murphy's office confirmed Tuesday that the sales tax holiday has not come up this legislative session and is not likely to.
New alcohol tax
For package stores, the new retail sales tax on alcohol may be the source of both resentment and confusion for some of their consumers.
The state already taxes alcohol at the wholesale level. However, current state and federal excise taxes on alcohol are figured into the prices before products arrive at package stores.