Jul 20, 2009

Big pitch by stores before tax risesBy Jenn AbelsonBoston.com

Struggling retailers in Massachusetts are rolling out huge discounts and blasting e-mails and letters to consumers, urging them to make big purchases before the 5 percent sales tax increases to 6.25 percent on Aug. 1.

“Those people on Beacon Hill are doing it to us again! Make your purchase by July 31 and save money!” proclaim the “Beat the Sales Tax” posters Westwood Furniture has plastered around its store.

Cityside Subaru recently sent a letter to customers with a chart depicting the hundreds of dollars in savings that would be achieved by purchasing a vehicle now, rather than next month. And the luxury bedding company WUL is throwing a “Summer Snuggler Tax Hike Special,” featuring 50 percent off of products at its Cambridge shop.

The tax increase applies to nearly all retail sales. Current exemptions, such as the sale of food (other than restaurant meals) and individual items of clothing costing $175 or less, remain in effect. But the state has repealed the exemption for alcoholic beverages purchased at shops; those, too, will be taxed at 6.25 percent starting in August.

The sales tax increase is expected to generate about $633 million and help plug holes in the state budget, but the timing couldn’t be worse for beleaguered merchants, coming at the start of what is expected to be a sluggish back-to-school season. The typical family is projected to spend about $548.72 on school merchandise, an 8 percent drop from last year, according to the National Retail Federation.

Some worried merchants, including Toys “R” Us, Sears, and Kmart, have started promoting Christmas specials to get ahead of the troubled economy.

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