Voting for a sales tax increase

Last night, the House voted to increase the sales tax from 5.0% to 6.25%.   I voted with the majority in the 108 to 51 vote.

This increase will raise approximately $900 million.   Of this total, approximately $300 million will go to fund Big Dig debt currently being carried by the Massachusetts Turnpike Authority and the MBTA.  This will reduce pressures for fare and toll increases, but will leave major capital needs in our transportation system unaddressed.   Approximately $200 million will be allocated to increase unrestricted general local aid so that no community sustains more than a 10% cut in general local aid from FY2009.  This will benefit all of my communities — Arlington, Belmont and Cambridge.  I will report the exact numbers as they become available.   Approximately $400 million will remain available for appropriation by the House to restore a portion of the $1.8 billion of deep program cuts in the House budget.

Here are a few key observations:

  1. Even with the tax increase, the House budget at $28 billion will include over $1 billion in  program cuts, including many program eliminations.  Valuable services will be lost, even with the tax increase.
  2. The $900 million sales tax increase roughly equates to the $900 million proposed by the Governor in a combined gas, meals and other tax increases  — see the Governor’s Budget and the Governor’s Transportation Plan.
  3. After the sales tax increase, if adopted by the Senate, the state’s sales tax rate will be in the middle among states nationwide; the overall state-local tax burden (total state-local taxes as a share of income) will also be roughly in the middle.
  4. Politically, within the House, the sales tax increase went down the middle.  Many members advocated a stronger package that would go further to cover the state’s needs, especially transporation; many other members advocated no new taxes at all.  I was in the former group, but I feel that the outcome fairly reflects the views of the House.
  5. The Senate has yet to take up the budget and is likely to cut revenue projections based on the economic downturn.  So, whatever comes out of the House, the Senate may make further cuts or recommend additional tax rate increases.

The vote involved some interesting cross-currents.  Despite his own early advocacy of various tax increases, the Governor threatened to veto the increase if reforms were not enacted first.   Indeed, many of us would have preferred to take the sales tax vote after the final votes on the conference committe reports for transportation, ethics and pension reform.  But in practice, this was impossible.  If we delayed voting on revenues, we could not pass the budget and then the Senate would not be able to take it up — the result would have been a budget coming in after July 1.  The budget and the various reform measures will arrive on the Governor’s desk at more less the same time.

The veto threat forced the speaker to spend the afternoon carefully counting votes to assure he would be able to override the Governor’s veto.   Among the holdouts, in addition to all of the Republicans, were many of the Democrats on the losing end of the recent speaker’s fight.

See the State House News story at the Belmont Citizen Herald.

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

29 replies on “Voting for a sales tax increase”

  1. Increasing the sales tax is only driving more buiness out of the state, in order to generate more buiness we need to try to keep people from driving to NH to buy there product. This may initialy generate dollars but how much will be lost in the long run?

    1. Thanks for commenting! Regarding busines going out of the state,the experience in prior tax increase votes is that buying patterns change temporarily, but people basically keep shopping where they shop. The economists do consider these issues in the revenue estimates.

      Will B.

  2. Will — Reform before revenue: How much savings do we have from reforms? How does this compare with the increase in the proposed sales tax increase?

  3. I agree with Dave,I am on a fixed income and the only thing goin up is my taxes.I have to keep cuttibg and the state just keeps spending.Really notthe way to go for good government.

  4. I’ve seen no discussion of the fact that any sales tax is a regressive tax that inordinately burdens lower income people. Our flat rate state income tax also over burdens lower income people, unlike the more graduated, progressive federal income tax. Of course, both income tax systems are full of loopholes to the advantage of higher income persons.
    There must be a better way to balance the budget than raising the sales tax.

  5. Isn’t the sales tax kind of a regressive way to increase revenue? I agree that more revenue is sorely needed to fund critical programs in the safety net for those at the bottom of the income scale who are barely holding on right now, if they are at all. As I understand it, ESL classes are being cut, for example, despite the fact that these are exactly the resources needed by the growing population of low income Latino high school students who are dropping out of school at a 50% level because of difficulties learning English, and are then joining gangs in the cities, leading only to poor outcomes and greater expenses for tax payers on many levels, from Emergency room care after street violence to prison costs, family dysfunction, DYS services, etc. Why can’t some of us who have more than we need agree to raising taxes on the highest income brackets in the state to make the cities we love safer for us all, and help our most vulnerable neighbors in a small way to weather this terrible financial time that is hitting them the hardest?

    1. Regarding progressivity, yes. Fair objection to the sales tax. I’ve urged a package that would make the income tax more progresive. See income tax proposal. But anything related to income tax right now is politically DOA. The sales tax seemed to be the least objectionable overall to people.

  6. I very much disagree with raising sales tax before reforming the state government and institutions. I agree with Gov. Patrick and think the transportation and pension systems for the state should be reformed before raising any more taxes on people who are losing their jobs and having a hard time paying for things they need.

    1. Everyone in the State House buys into the idea of reform before revenue. The House has passed ethics reform, pension reform and transportation reform and these bills will all work their way through the Senate and the conference process and end up on the Govenor’s desk around the same time as the budget.

  7. Facts is facts! The funding required for Massachusetts to function for her citizens is woefully short. Of the options available, it seems to me that a sales tax increase makes the most sense. No matter what its name, increased revenue is desperately needed.

  8. If reform of state pension plans arrive at the same time and have a good chance of being passed, I also agree with June.

  9. The sales tax plan seems honorable (although I support Will’s, and other legislator’s, commitment to establishing more progressive tax policy). I am not convinced consumers will flock to New Hampshire to compensate.

    However, I am wondering why discussion this sales tax seems to preclude any further taxes on gas? It seems that we could still raise the gas tax, earmarked for transportation needs (road and bridge repairs as well as mass transit) and remain well under $3/gallon in the current market. (If gas went up to a certain threshold, a temporary freeze in the tax could be put in place.)

    1. Thanks, Deb. The sales tax doesn’t preclude a gas tax for transportation infrastructure, but the gas tax gets less popular the further you get out of the metropolitan core. It appears that the gas tax lacks the necessary votes.

  10. How disappointing. I don’t expect representatives whom I consider to be progressive to ever vote in favor of regressive taxes. I guess that’s the thing about being a far-left or far-right voter. Our Reps will often disappoint us by playing to the center. Sad day. )-:

  11. I thought the progressive new reps. would stick together and work towards increasing the gas tax, allowing local option taxes, and removing the sales tax exemption alcohol. The sales tax seems so regressive and has the potential to hurt businesses. I am all for increasing revenue but I think some taxes are better than others.

  12. I am disappointed in that the sales tax increase does not raise enough money and is regressive, as others have pointed out. There are two parts to the deficit problem. One is the economic meltdown that has reduced tax receipts and the other is the systemic longstanding underfunding of our transportation infrastructure. I think it would have been much better to pass the gasoline tax increase for the transportation underfunding (and a gasoline tax would also have good environmental outcomes) and a temporary increase in the income tax rate for the current economic downturn. I think it is fair to say that the tax increase is not enough to fix the transportation infrastructure problem or cover the other deficits. We will see MBTA fare increases and service cuts, but not as draconian as predicted, and less money available for road and bridge repairs than is needed. And not enough funds for the other cut programs. Maybe this is the best the House could do, but that certainly says something.

  13. I really appreciate all of these comments. They mirror the range of opinions in the house — from “no new taxes” to “let’s have higher and more progressive taxes.” The speaker steered a course that was pretty much down the middle, which is what he had to do assemble the necessary votes and keep the process moving. Legislative leadership is about figuring what can get the necessary votes.

    One thing that all agree on is the need to pursue reform and to deliver it before revenue. The House has passed reforms in rules, ethics, pension and transportation. These are all working their way through the process — the Senate and then conference committee. It would have been better to let that process complete before voting any revenues, but if we had, we wouldn’t complete a budget before July. It’s all imperfect, but we’ve certainly made real progress on reforms.

    Again, I appreciate the conversations that are occuring here. Thank you.

  14. Hello Rep. Brownsberger,
    How about a TEMPORARY (say 3 yrs.) income tax surcharge ONLY on the wealthiest among us. Who could object to that?
    I believe California, New Jersey and New York are moving in that direction. This would test the state’s ability to roll back an increase. Will the sales tax increase be rolled back after we’re “out of the woods”? Years ago, the state promised a roll back on a “Temporary” Income Tax Surcharge. Never fully happened.
    Regressive taxes stink! Casinos, more lottery games?
    I’m old enough to remember when “playing the number” was illegal,considered immoral and neighborhood bookies were arrested. The lottery became OK, once the state took over.
    On a positive note, I prefer the Sales Tax increase and taxes on the wealthy together, so it’s truly a “shared sacrifice”.
    Without complaint they’ll say “What took you so long?”
    The “Gas Tax” is the worst! Thanks for listening.

    1. Personally, I agree that this might make sense, and we could even do it with an increased exemption to help people of moderate income. I’ve talked this idea around some. Unfortunately, many voters would not trust the state to do the rollback. The income tax is perceived as a third rail right now.

  15. Will,
    I am very unhappy about an increase in the sales tax and feel very strongly that the tax increase should be on gasoline.

    1. I also preferred a gas tax increase. Unfortunately, the gas tax did not have the votes to pass. I actually campaigned in the House for an environmental statement about transportation which included a gas tax increase. I found there was a low ceiling on support for the statement — not close to majority; the gas tax was the primary objection. Go to the “Transportation/Environment” link above on the right hand side to see the statement and the relatively short list of signers. Thank you for commenting!

  16. The problem with the sales tax is that it is regressive and it hits people who have the least – and even people struggling because of this economy – hardest. Even though increases in the income tax aren’t popular, at least the income tax is not regressive. In these hard times, that matters.

  17. NO Sales Tax increase. Consumers are hurting and business are hurting. We want to stimulate the economy no kill it!
    People are already leaving the state to shop and businesses are leaving too.

    Legislatures need to find a way to create a budget that meets revenue.

    Then work on ways to stimulate revenue through the taxes we already pay which is too much!

  18. NO INCREASE IN SALES TAX , Will you scoundrel since you were elected you voted to spend money on this , money on that when the money gets tough the first thing you did was to vote for more taxes – Clean up the waste in the state government first, More taxes will just drive more people from the state Me included. You never talk about the cutting the big increase in the Domestic violence budget that Diane Patrick is pushing for since she is on the board of Directors of Jane Doe Inc. – More like Big Pork Inc that really does nothing to stop domestic violence since it only helps woman and does not assist men who are victims of Domestic violence – Not to speak of the six figure salary’s they pay. Time to do some real work.

    Yes Will I am tough – but it seems that the people on Beacon Hill do not listen to the people they are suppose to represent.

  19. I have to agree with Senator Robert Hedlund when he called this bill a stimulus bill for New Hampshire. Residents from Massachusetts will make the trip more often to New Hampshire or purchases over the tax free internet. You can not keep increasing the tax burden on residents of Massachusetts, we need bills that will stimulate our economy not push business elsewhere.

  20. I held off on commenting because I couldn’t believe the Senate would actually pass the same sales tax increase. Now that they’ve done so, I’m incredulous that a Democratic legislature would go with the most regressive tax possible. I read your earlier responses regarding why the House didn’t take up an income tax increase or a gas tax increase, but I feel like given the arm twisting (excuse me, “carefully counting votes”) that went on for the sales tax increase, the same could have been done to pass an increase in either of the other taxes.

    Also, why 6.25%? It seems like the norm nationwide is about 6%. Is the extra .25% just so we can keep the Taxachusetts moniker by having a higher tax than the typical state (and in particular a higher tax that Connecticut and Vermont)?

  21. Only in Taxachusetts could you double tax something!! Alcohol is already taxed by the state!!

    When the economy turns around and the tax revenue goes through the roof will the legislature be as quick to give the tax payers back some of there hard earned money? or will they just do the same old same old and spend spend spend?

    I can give you that answer right now! NOT A CHANCE!! were still waiting for that “temporary” income tax increase to roll back after 16 years, or was it 17 years?

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