Mass. Senate approves sales-tax increase

Senators joined their House counterparts in mustering a veto-proof majority for the sales tax, standing up to Governor Deval Patrick, who has threatened to veto broad-based taxes unless the Legislature also overhauls the state transportation agencies, pension system, and ethics laws.

Senator Gale D. Candaras, a Wilbraham Democrat, seemed to speak for the majority when she told her colleagues on the floor that there was “absolutely no good card in the hand,” when it came to raising taxes.

Still, she said, “this sales tax will fund a lot of very important
programs, at least in part for some of the most vulnerable citizens.”

Opponents pointed out that, of the five states bordering
Massachusetts, only Rhode Island, at 7 percent, has a sales tax rate above
6.25 percent. Only eight states nationwide have a higher rate. They warned
that the higher tax rate would hurt the state's ability to recover from the
recession.

“Maybe we should call this the New Hampshire economic stimulus
bill,” Senator Robert L. Hedlund, a Weymouth Republican, said with sarcasm.

Supporters argued the burden from the higher sales tax on
Massachusetts residents, even at 6.25 percent, would be among the bottom
third of states because Massachusetts does not impose sales taxes on
groceries, clothing under $175, and prescription drugs.

The vote was 29-10 to hike the sales tax. The Senate took a voice
vote to remove the sales tax exemption on alcohol. The governor has
supported that tax, as a way to avoid broad-based taxes, but the House has
so far ignored it. The meals tax would remain unchanged in Massachusetts,
at 5 percent.

Senate approval of the tax hikes came on a day of furious lobbying
and wrangling behind closed doors. Hundreds of demonstrators, including
many in motorized wheelchairs, with developmental delays, and using guide
dogs and canes, jammed Beacon Street early in the day, calling on
legislators to raise taxes and “save our services.”

"Families will be devastated if this budget passes!” declared Gary
Blumenthal, executive director of the Association of Developmental
Disability Providers, eliciting cheers and applause from the crowd.

Inside a State House hearing room, a dozen clergy members from
various faiths held a press conference to echo the call for higher taxes.
The Rev. Ray Hammond, chairman of the Boston TenPoint Coalition, decried
deep cuts in youth-violence prevention programs, declaring to cheers: "The
implication is the lives of these youth don't count and their communities
don't count. But we're here to say they do count."

The Senate ultimately agreed that higher taxes were needed to
offset some of the cuts they have proposed. Money from the sales tax hike,
they said, would be spent on a multitude of services. Among them: $4
million for summer jobs for at-risk youth, $5 million for work force
training, $6 million for regional tourist councils, $36 million for special
education, and $10 million for Massachusetts rental housing assistance to
enable 1,700 families to stay in their homes.

“We cannot cut our way out of this problem,” said Senator Steven C.
Panagiotakos, chairman of the Ways and Means Committee. “We cannot reform
our way out of this problem. We cannot tax our way out of this problem. It
has to be a balanced approach. And I believe this budget and the debate
thus far has provided a balanced approach on dealing with the fiscal crisis
facing the Commonwealth, and setting us up to face it a little bit better
in the upcoming years.”

Earlier in the day, senators shot down a raft of other tax hikes. A
proposal to hike the state income tax from 5.3 percent to 5.95 percent went
down in defeat. Supporters argued it was fairer than the sales tax and
would raise $1.3 billion annually. Opponents said the measure would drain
household budgets and hurt small businesses.

The Senate also voted 33 to 6 to torpedo the governor’s proposal to
hike the gas tax by 19 cents and later defeated an 11-cent hike in the gas
tax.

The sales tax hike generated the fiercest debate. The Retailers
Association of Massachusetts cited a study by the Beacon Hill Institute and
warned that it would cost Massachusetts 12,600 jobs.

“What you get right now are actually a lot of consumers from Rhode
island, Connecticut, and New York coming into Massachusetts and purchasing
here,” said Jon B. Hurst, president of the Retailers Association. “Not only
is that incentive going to be gone but we’re going to create an incentive
for our own consumers to head to new Hampshire and, just with a couple
clicks of the mouse, go on the Internet, all tax-free.”

The alcohol tax drew support from lawmakers who said it would
raise $15 million for services to offset what they described as a heroin
epidemic in Massachusetts. “When we have an addict, we’ll have a bed for
them,” said Senator Steven C. Tolman, a Boston Democrat. “This money will
help us put these beds on line.”

Opponents said taxing booze would hurt workaday residents. “It
sends the wrong message to a lot of the working-class people out there who
might want to buy a six-pack and enjoy that after they go home, if they’re
still lucky enough to have a job,” Hedlund said.