Sales Tax Holidays

" Moving -- lots of states have sales tax holidays right before the start of the school yeah. But are they a good idea or just a political ploy joining us now for both sides of this issue. We have John Hurst president of the Massachusetts retailers association. Who thinks this is a great idea and it actually stimulates. Purchasing and buying -- the company's. But Joseph henchman tax counsel at the tax foundation. Is against it he says it divert attention from long term tax reform good to have you both. -- brilliant justify the start with you since you think this is a bad thing I always thought it was a great thing that it -- a couple of days of tax free spending. At least for certain you know within certain parameters why am I wrong."

" Well their political gimmicks the biggest problem is that they impose huge administrative and compliance costs. It's basically for two days of the year you throughout the tax cut and put in new one. All the retailers have to learn these rules and and be able to comply with them. They can mislead consumers because consumers don't always know what goods. Are exempt itself I -- these are -- usually don't cover all goods. They discover some goods up to a certain and I can confuse consumers and our parents all right John that you with a retailers association -- you deliberately getting out that lowering to sales taxes and confusing you'll consumers. I'll I'll tell you what the sales tax holiday in Massachusetts and so many other states were up about sixteen states now are. Are just proven incentives for the consumer I called a Boston tea party effect is what happens. It brings. Consumers into the stores when they wouldn't otherwise be there. And in this spending money for a lot of stores it's like the weekend in December. And you know I hear what what he's saying as far as -- some of the red tape in Massachusetts we we did it right Vermont another State's -- Copy Massachusetts everything is is covered 2500 dollars unless there's no red tape. Consumers come in the retailers love it it's great for main street and it's great for consume us."

" Job though Maryland to have to put this humble till 2010 and a lot of states may follow because they need the tax revenues now that we have. A slowing economy."

" Well you know we -- debate here Massachusetts right up to the end looking at the budget but. You know it in the final analysis we decided you know what better way to stimulate our economy and ultimately all tax gains. Then to really invested back in the consumer over 70% of our economy is consumer spending if we don't invest in try to get stimulation there. What better way is that that anyone can come up -- and and you know interestingly enough. We've had five years here in Massachusetts each August we've collected more sales tax in that August in the prior year. That goes right back to the very first year 2004 compared to 2003. In which there was no sales tax holiday -- I have to point obviously taking place in Massachusetts in November in Massachusetts -- state ballot initiative to get rid all of the state income tax surely -- a sales tax holiday would be good practice of getting -- all the state income tax that's silly joke he got in favor of this this practice. Well maybe it is good practice what the biggest problem is that these sales tax holidays they usually justified as a way Q. Lower the tax burden on low income individuals. Why only do it for two days then you were part of a Massachusetts that. New Hampshire put up signs on -- the border Massachusetts's. Number of days without a sales tax holiday New Hampshire 365 Massachusetts to. I don't see why we have to limit this to only two days a year the benefits or so ago watched -- but the -- rehabilitation the tax foundation that joke is in favor of abolishing these state income tax and that is it. Is it what we're not we're not for against St. actually favors sound tax policy that's. Simple neutral transparent stable tax how about mustache he's -- have a favor of that. Well if if if they're simple on neutral but one thing that's not is itself I thought it's because they confuse consumers. And there's a better way of doing a rather in exempting letting politicians decide what goods get to qualifying what goods down. John and I."

" You use you gave us some numbers of how this is working do you find are you able to break -- so called halo effect where. For example in Massachusetts the deal was that all retail items up to 2500 dollars or tax exempt for two days. In some other states its energy efficient things they want to encourage people to buy. Air conditioners for their dorm rooms right before back to school things like that so there are parameters within which you have to stay but. Do you find that halo effect then continues somebody goes in to buy an air conditioner and then the final set of tools as well."

" So much of this frankly -- is impulse buying. You know what makes it work is that you're recovering sales back from frost recovering sales from New Hampshire and the Internet you have a lot of people looking up to avoid the tax on the Internet. And it is also creating impulse buying and can and really momentum just like to see during the christmas holiday season they're coming in to buy that one item. Fully at least a third of the time they're buying something they didn't plan to hand they're also coming back in in following weekend's. Really just because they're getting in the they have that the consumer is that a creature of habit and all too often lately they haven't has been staying home not spending money."

" Good to see you both. John -- Joseph henchmen that this is a story that will develop and we're bringing you back to see what happens thank you both very much thank you have much."