DiMasi budget would slash corporate income tax

February 12, 2008 04:05 PM Email| Comments (0)| Text size – +

By Matt Viser, Globe Staff

House Speaker Salvatore F. DiMasi this afternoon outlined a proposed budget that would slash the state's corporate income tax -- from 9.5 percent to 7 percent -- and increase the cigarette tax by $1 per pack.

DiMasi’s corporate tax cuts would be spread over three years, with the first reduction to arrive in January 2009 followed by stepped decreases in 2010 and 2011. The cuts are deeper and faster than a proposal by Governor Deval Patrick. At the same time, DiMasi has agreed to the governor’s plan to tighten the state’s corporate tax codes and close what Patrick has called loopholes that are costing the state hundreds of millions of dollars.

“It has to be a balanced approach,” said DiMasi, who in the past has vigorously opposed corporate tax changes. “This is a very difficult fiscal year, and we were looking for revenue sources.”

DiMasi also wants to have the House vote to approve a measure on Wednesday that would freeze unemployment insurance rates that are paid by businesses -- which would not affect the state budget but would leave $150 million in the hands of Massachusetts corporations. Although he called it a "proposal for a balanced budget," DiMasi outlined his plan in only the broadest strokes and said it will be filled out in further detail as the House devises a budget in response to Patrick's budget proposal last month.

The $1 a month increase in cigarettes would pay for unexpectedly high costs in the state's landmark universal health coverage law. DiMasi said he would include $100 million in unspecified budget cuts and dip into the state's rainy day fund. DiMasi also said the House budget will not include money from casino licensing, as Patrick has proposed. And he expressed doubts about new spending plans, an apparent allusion to Patrick's proposed increases in education spending.

As expected, DiMasi avoided using any revenue that the governor expects to gain through licensing three resort casinos.