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Joan Vennochi

Mitt's no-tax mirage

MITT ROMNEY has the fever, the George Herbert Walker Bush no-new-tax fever. Read his lips. No new taxes.

But what about new fees?

On the presidential campaign trail, Romney brags about a $3 billion budget shortfall he said he closed as governor, without any tax increases. He doesn't mention the more than $400 million in fees he raised instead. He also raised more than $300 million by closing so-called corporate loopholes, a revenue-raising measure the business community calls a tax increase.

"He should be held accountable for fee increases and closing the loopholes," said former Massachusetts governor Paul Cellucci, who now supports Rudy Giuliani in his bid to win the GOP nomination.

Cellucci credits Romney for "fiscal discipline" but faults him for failing to achieve "broad-based tax relief." Cellucci counts Romney's tax relief accomplishments as "a sales tax holiday and a one-time adjustment in the capital gains tax."

When Romney ran for governor in 2002, he refused to sign a no-tax pledge. Now, as a presidential candidate, he boasts that he is the only major candidate to sign such a pledge.

He also touts his record of "strong fiscal leadership" as governor. However, in a recent "Fiscal Policy Report Card" on governors, The Cato Institute, a libertarian think-tank, gave him a "C."

Romney, the Institute pointed out, "proposed modest increases to the budget and line-item vetoed millions of dollars each year only to have most of those vetoes overridden." As far as the image Romney cultivates as "a governor who stood by a no-new-taxes pledge," the Institute called it "mostly a myth." As evidence, the Institute cited the hefty fee increases and business tax hikes achieved through the closing of loopholes.

The Institute noted that as governor, Romney never could deliver on his call to cut the income tax rate from 5.3 percent to 5 percent; and that in 2006, he called for $170 million more in business tax hikes, "almost completely neutralizing the proposed income tax cut." Besides, "If you consider the massive costs to taxpayers that his universal healthcare plan will inflict once he's left office, Romney's tenure is clearly not a triumph of small-government activism," the Institute said.

Once polls showed a tightening primary race in New Hampshire, Romney started going after Giuliani on taxes. Their sparring on the subject took up a major chunk of the most recent debate between GOP presidential candidates.

The tough no-tax pledge language is another facet of the Romney transformation from Massachusetts candidate to national Republican candidate. It also leaves Romney vulnerable once again on the trust issue.

Which candidate should Republican primary voters believe - the pro-choice gubernatorial candidate or the antiabortion presidential candidate? The gubernatorial candidate who wouldn't sign a no-tax pledge because he didn't find it responsible, or the presidential candidate who couldn't wait to sign one?

Back in 2002, Romney said, "I'm against tax increases. But I'm not intending to, at this stage, sign a document which would prevent me from being able to look specifically at the revenue needs of the Commonwealth." At that time, his spokesman called the no-tax pledge "government by gimmickry."

Now Romney embraces the gimmickry. So did Bush, during his 1988 campaign against Massachusetts Governor Michael S. Dukakis. It helped elect him and then it backfired famously on him.

Facing a budget deficit, the first President Bush was forced to back away from his "Read my lips. No new taxes" pledge. He ultimately reached a budget compromise with a Democrat-controlled Congress. It increased the marginal tax rate and phased out exemptions for high-income taxpayers. It also soured conservatives on his presidency and helped set the stage for his 1992 loss to Bill Clinton. Shifting economic conditions, including a rising unemployment rate, also contributed to the senior Bush's defeat.

In his zeal to capture conservative votes, Romney forgets those political lessons, not to mention the realities the next president might face. They include a budget deficit and the possibility of a Democrat-controlled Congress. Shifting economic conditions are also possible, as some GOP candidates acknowledged during the Michigan debate. "They're going to hear Republicans on this stage talk about how great the economy is and, frankly, when they hear that, they're going to reach for the dial," said Mike Huckabee, the former Arkansas governor.

In the meantime, read Romney's lips. No new taxes. But, are those lips saying anything about fees?

Joan Vennochi's e-mail address is vennochi@globe.com.

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