Lawmakers postpone tax hike debate
By Matt Viser, Globe Staff
House Speaker Salvatore F. DiMasi this afternoon postponed a much-anticipated debate on Beacon Hill over whether to approve the state’s biggest tax increase since 2002 amid criticism from all sides of the issue.
The House was expected to begin debate this afternoon on legislation that would allow about $356 million in tax increases for smokers and the state’s largest corporations.
But about 20 to 30 Democratic legislators were challenging DiMasi’s plan for not being aggressive enough. Business leaders and Republicans also offered a pre-emptive strike in the debate around noon, charging that the plan would hurt businesses amid a looming recession.
“We have a fundamental problem with the timing, scope, and nature of the bill,” said House Minority Leader Bradley H. Jones, a North Reading Republican. “This tax package will be nothing but the death knell for the state’s economy.”
Debate on the proposals is now expected to take place on Thursday.
The proposals would tighten corporate tax laws – bringing in $204 million next year – and would raise $152 million by increasing the state’s cigarette tax by $1 per pack. The cigarette increase would give Massachusetts the second highest cigarette tax behind New Jersey, although New York is planning to trump both states with a $2.75-per-pack increase.
DiMasi outlined the proposals two months ago in an effort to compromise with Governor Deval Patrick, who since taking office last year has been calling for closing so-called corporate tax loopholes.
Patrick and DiMasi have both backed a plan to tighten the corporate tax codes, but they have significant differences over how deep corresponding reductions in corporate tax rates should be.
Overall, DiMasi's plan would mean that businesses would pay about $204 million more next year, but by 2011 would be back to what they pay now. Because Patrick's plan does not lower the tax rate as quickly or dramatically, businesses would still end up paying $280 million more once his plan is fully implemented in 2012.
