DiMasi opposes Patrick's plan to close 'corporate tax loopholes'

BOSTON --House Speaker Salvatore DiMasi soothed business leaders but set up Gov. Deval Patrick for a legislative battle when he revealed Monday that he opposes the governor's plan to raise hundreds of millions of dollars by closing what he calls "corporate tax loopholes."

DiMasi -- suddenly the elder statesman on Beacon Hill with Senate President Robert Travaglini planning to step down Wednesday -- said the new governor's plan was a "catalyst to reduce jobs." Lawmakers should tap the $2.2 billion "rainy day" fund to help close any budget deficit, he said.

"These kinds of proposals just raise the level of uncertainty and could stall decisions by employers to grow jobs, expand their businesses and even move here to Massachusetts," DiMasi told the Greater Boston Chamber of Commerce.

DiMasi said he told Patrick on Monday night of his opposition to the governor's plan to raise $295 million in added revenue in 2008 and $500 million in 2009 from closing "tax loopholes."

DiMasi said he'll form a task force -- which historically are legislative code words for "good riddance" -- to examine tax law changes. Patrick needs the extra revenue to pay for his proposed new police officers, expanded kindergarten programs and property tax rebates.

"He made it clear that he would rather see the loopholes closed immediately so that he could use this money in balancing this year's budget," DiMasi said of Patrick's response.

Patrick, who has projected a $1.3 billion spending gap for the fiscal year starting in July, has said the loopholes were unintended by state legislators.

Patrick spokesman Kyle Sullivan said the money was needed for important proposals. One Patrick plan -- which would cost $75 million annually -- would make an estimated 100,000 households eligible for a state tax credit of up to $860 a year to help offset property tax increases.

"The governor and the lieutenant governor look forward to working with the House and the Senate on these and other priorities," Sullivan said, declining other comment.

But businesses leaders cheered DiMasi's position. Brian Gilmore, executive vice president of the Associated Industries of Massachusetts, said companies need predictability to budget ahead and make investments.

"If the state has a habit of every year closing so-called loopholes, it gets the reputation that people can't make long-term investments in their companies," Gilmore said.

Mutual fund giant Fidelity Investments, based in Boston, is not expanding in Massachusetts, for example, and Framingham-based Staples recently moved some service center jobs to North Carolina, Gilmore said.

Paul Guzzi, president of the Greater Boston Chamber of Commerce, endorsed the task force and said it should be taken seriously.

"Take a look at the entire tax code, and be able to look at what makes sense to streamline and what doesn't," he said. "That is a very logical way to approach it."

Patrick's proposed $26.7 billion spending plan represents a 4 percent increase over the $25.6 billion budget approved last year.

The governor's proposed municipal aid package also would close what Patrick described as a $78 million loophole that exempts telecommunications companies from paying property taxes on telephone poles and wires.

DiMasi said that proposal remained "on the table.... That's different. That's a property tax that will be generated to cities and towns."

But DiMasi said the House Ways and Means Committee's budget to be released April 11 would not include new revenue from businesses.

DiMasi would not comment on how much he's willing to spend from the rainy day account. He said there would be cuts in his budget, but would not offer specifics.

The economic stimulus package passed last year is paying dividends, he said, and increasing the tax burden would hamper progress. For example, the state's $2.1 million investment toward a new Target retail distribution center in Westfield eventually will lead to 1,000 new jobs, he said.

The state is down 140,000 jobs since 2001 levels, he said.

Also Monday, DiMasi highlighted his "Green Communities Act," which aims to help cities and towns reduce electricity demand and develop energy efficient projects through grants and loans. His bill, first outlined in December and filed Monday, would create a new Cabinet-level energy secretariat in the executive branch.