SalemNews.com, Salem, MA

Business

August 8, 2012

A break from sales tax

Consumers and businesses benefit from holiday

Supporters of the upcoming sales tax holiday call what brings out shoppers the “Boston Tea Party effect.”

“The sales tax is one tax you can avoid, and consumers do,” said Bill Rennie, vice president of the Retailers Association of Massachusetts.

Last week, state lawmakers approved a tax holiday for this Saturday and Sunday. Besides being an opportunity to stick it to the state, it’s also a chance to save money. Customers save $6.25 on every $100 they spend.

That adds up when buying big-ticket items.

“There’s an opportunity to save some money,” said Tom Kulevich, vice president at Tri-City Sales in Salem and Ipswich, “especially if they are doing a large kitchen remodeling and they are buying some pieces.”

What is at play in the minds of consumers?

“Basically, for value-conscious consumers, a penny saved is a penny earned,” said Yu Hu, an assistant professor of marketing at Salem State University who has studied consumer psychology. “For many customers, the sales tax holiday is a discount.”

Consumers like to shop tax-free, Hu said, and many feel better about buying something that is tax-free rather than buying an item with a 10 percent discount.

However, Hu offered a warning: Shoppers who stumble onto the tax holiday and find they are getting an unexpected bargain may be the most susceptible to overspend. That’s because the unexpected discount may put shoppers in a better mood, and, Hu said, shoppers who are in a good mood tend to shop more impulsively. Hu recommends shoppers plan ahead, make a list and stick to it.

Lauren Dalis, area director of marketing for the Northshore and Liberty Tree malls, said customers often use the tax holiday to save on expensive items like laptops and other electronics. “It just gives them that added bonus and that added incentive to go out and purchase them that weekend and not wait another month,” she said.

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