June 30, 2009 Sales tax border crossing worries small businesses Play video

(NECN: Jennifer Eagan, West Boylston, Mass.) - Not everyone is pleased with the new budget signed by Massachusetts Governor Deval Patrick.

Business owners worry the sales tax hike included in the budget will drive business across the border.

Try selling diamonds during a recession. It's what Mike Pucko of Pucci's Jewelers in West Boylston does and he is afraid it is going to get a whole lot harder come August 1st.

"It certainly puts us at a disadvantage for high ticket items," Pucko said.

Monday, Gov. Patrick signed a $27.4 billion budget into law. It included a 25 percent increase in the sales tax -- from 5 to 6.25 percent -- the first time the tax has been raised in 33 years.

"On a $5,000 item, it'd be over $300 and to make a trip to New Hampshire," Pucko said. "The gas isn't going to cost them that much."

Take a $46-hundred dollar diamond ring. At 5 percent the sales tax is $230. At 6.25%, it is $288.

Even 30 miles away from the New Hampshire border, where customers are known to travel to avoid the Massachusetts sales tax, Pucko fears he will lose business.

"The real deciding factor will be Christmas, whether they cross the border or not," Pucko said.

The feeling is similar at Vin's TV and Appliance in Shrewsbury.

Owner Jim Rothera said many of his electronic items can be found on the internet free of a sales tax. For 25 years, face to face service has been his sales pitch for buying local.

But

"When you do buy something there, you don't pay a sales tax," Rothera said. "So there needs to be something to make it an even playing field."

NECN's Jennifer Eagan reports.