Frank Conte, Communications|
Tax holiday boosts Bay State economy by $64 million creating 162 jobs
- An economic analysis by the Beacon Hill Institute at SuffolkUniversity
finds that the sales-tax holiday created scores of jobs and boosted
the economy by tens of millions of dollars.
tax-free weekend, which ended at midnight last night, suspended the
Commonwealth's 5% sales tax on select purchases up to $2,500. Officials
estimated that it would cost the state $12.8 to $19.2 million in tax
institute bases its findings on its State Tax Analysis Modeling Program
(STAMP). STAMP is a "computable general equilibrium" (CGE)
tax model - a computerized method of accounting for the economic effects
of tax policy changes. The models have been used successfully by policymakers,
research institutes and tax policy researchers. BHI simulated the estimate
of revenue loss after adjusting for purchases that would have been made
at another time in the year.
from the model estimate that the sales-tax holiday produced the equivalent
of between 108 and 162 full-time equivalent jobs (resulting part-time
and temporary employment) and boosted real state Gross Domestic Product
by between $42 and $64 million dollars. Moreover, state real disposable
income was boosted by between $3 and $5 million.
1: Summary Results
State Gross Domestic Product
boost results from economic activity that took place as a result of
the tax holiday that would not have taken place otherwise, including
additional purchases by Massachusetts consumers, tourists and residents
from bordering states. David G. Tuerck, Executive Director, said that
"the sales-tax holiday provides a simple lesson in economics: consumers
respond to incentives." He added, "The cost to the state's
treasury is modest and lends to the argument that a tax holiday should
be made permanent."
8/15/07 2:42 PM