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BOSTON (State House News Service) — Lawmakers heard a lot Monday about an "elegant" proposal that would peel off a portion of the state's sales tax revenue from online shopping to use as grant funding for organizations working to revive Massachusetts downtowns that have been hollowed out by changes in consumer preferences, but state tax collectors suggested it might not be feasible.
The bills (H 228 / S 130) filed by Rep. Antonio Cabral of New Bedford and Sen. John Cronin of Fitchburg would establish a Downtown Vitality Fund managed by the Executive Office of Economic Development. The fund would get 5 percent of the sales tax revenue generated by online retailers to be used for matching grants to support staffing and operations of business improvement districts, main street associations, state-designated cultural districts and parking benefit districts, especially in Gateway Cities and other low-income communities.
The Department of Revenue may have thrown a wrench in that idea, though. DOR told the News Service this week that it is unable to provide an estimate of annual sales tax revenue the state collects from online sales. Because taxpayers are not required to break down sales tax collections by type on their returns, DOR cannot determine the amount of sales tax revenue that is attributable to online transactions, the agency said.
Sales and use tax collections -- from online and in-person transactions -- totaled $9.401 billion in fiscal year 2023, DOR said in its fiscal year-end press release in August.
At Monday's hearing before the Joint Committee on Community Development and Small Businesses, the economic development director for Attleboro pointed out to the committee "just how elegant" of a solution the "downtown vitality" bill presents.
"You're taking a source that has, for the last several decades, really detracted from our downtowns and our Main Streets, and you're using a source of funding coming from that detrimental impact and you're using it to try to heal some of the wounds," Catherine Feerick said. "I really look forward to seeing where this legislation ends up because I think it could be, really, a model for other states."
Written by Colin A. Young/SHNS
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