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House discusses hiking income, sales taxes

By Jim O'Sullivan
State House News Service / March 11, 2009
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Sour budget predictions from leading local economists, including forecasts of a deficit as high as $4.3 billion next fiscal year, prompted House members to discuss raising the state's largest tax revenue generators, the personal income tax and the retail sales tax, dangerous political terrain as Beacon Hill desperately seeks a way out of its fiscal crisis.

During a two-hour caucus yesterday in which economists predicted the crisis could last until fiscal 2012, Representative Elizabeth A. Malia, Democrat of Jamaica Plain, suggested the income tax as a means to stave off deeper budget cuts, according to several lawmakers who attended. Lawmakers also discussed elevating the state's 5 percent sales tax.

Senate Ways and Means Chairman Steven Panagiotakos, Democrat of Lowell, rejected an income tax boost, telling the News Service, "As far as the income tax, I think the voters have preempted that issue. I personally would not be in favor of increasing it.

"If it is looked at instead of a gas tax and meals tax," he said of the sales tax, "then I think it is something that should be considered. Certainly, the question is at what level." Panagiotakos added, "People that have heard of the sales tax would much rather do a cent on the sales tax than 19 cents on the gas tax or the meals tax."

Asked about the income tax after the caucus, Speaker Robert A. DeLeo said the House is considering all options.

DeLeo said he was unsure whether the House would go along with the income tax hike, and said he would probably have a better sense "within a month or two" of House sentiment on budget decisions.

In a statement released later, he said: "In talking to members, I have found little or no support for an increase in the income tax. I myself have serious reservations about doing something that would put such a burden on the families of Massachusetts. Given the strain the state's families are under, I am committed to serious reform and profound cuts before considering any new revenue items."

A higher income tax would be a further repudiation of a 2000 voter mandate to roll the income tax rate from 5.75 percent to 5 percent.

Representative Ellen Story, Democrat of Amherst and one of DeLeo's four division chairs, said members showed broader support for bumping the 5 percent sales tax, which Governor Deval Patrick has already targeted by proposing to repeal exemptions on candy, sugared drinks, and alcohol.

Lawmakers heard from the former president of the Federal Reserve Bank of Boston, Cathy Minehan, and Michael Widmer, president of the Massachusetts Taxpayers Foundation. Several emerged from the meeting saying it had darkened their view of the state's fiscal condition.

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