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Patrick says he'll approve tax hikes; measures will raise more than $1B

E-mail|Link|Comments () June 26, 2009 06:09 PM

By Matt Viser, Globe Staff

Get ready to shell out more at the cash register. Governor Deval Patrick said today that he will sign a budget that would raise more than $1 billion in new revenues by hiking taxes on everything from satellite dishes to cheeseburgers.

Patrick’s support – which comes after overwhelming approval from House and Senate lawmakers last week – means that the state sales tax will be raised from 5 percent to 6.25 percent starting Aug. 1 and hit residents at a time when many are losing homes and jobs. About $275 million of the new revenue from the sales tax will be directed to the state’s transportation network, preventing toll hikes on the Massachusetts Turnpike, at least for now.

The statewide meals tax will also increase, from 5 percent to 6.25 percent, and municipalities will have the option to levy an additional 0.75 percent. Taxes will also go up on satellite television users, and an exemption on alcohol sold in retail stores will be eliminated. Communities will also be allowed to raise the local hotel tax by 2 percentage points.

It would be the first increase in sales and meals taxes since 1975.

“I will approve the new revenues we need to bring our budget into balance, offset the need for even more difficult cuts, and expand opportunity throughout the Commonwealth,” Patrick said in a statement. “Due to the economic challenges that all states are facing, this new revenue is necessary to prevent us from losing ground on our long-term goals in education and health care, and further straining safety net services that are struggling to meet the increased demand.”

Massachusetts right now has one of the lowest sales tax rates in the country, and the state also exempts several items from the tax, such as food, and clothing that costs less than $175. The state passed a 3 percent sales tax in 1966, and it was increased a decade later to 5 percent, where it has remained since.

Patrick had threatened to veto the sales tax increase unless the Legislature enacted ethics, pension, and transportation bills. The Legislature passed the bills and Patrick said he would now approve the new revenues in the budget.

"These sweeping reforms have made it to my desk, and they are a critical down payment on changing the way business has been done on Beacon Hill," he said. "Because of that, I will approve the new revenues we need to bring our budget into balance."

Retailers reiterated their opposition to the sales tax increase. “It’s going to hurt small businesses, and it’s going to hurt consumers,” said Jon B. Hurst, president of the Retailers Association of Massachusetts. “Their costs are going up, their sales are going down – all at a time when revenue is down by double digits. It’s a very, very troubling new tax that’s going to be very difficult to overcome.”

Patrick took a major political gamble, which is now paying off when, on the morning of April 27, he released a letter to legislators threatening to veto the sales tax increase unless they first approved the changes he wanted. "It was a risk, but he seems to have pulled it off," former governor Michael S. Dukakis said in today's Globe.