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Sides dig in on sales tax hike

House Democrats lean toward 6%

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By Matt Viser
Globe Staff / April 17, 2009
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Small-town mayors, liberal legislators, and deeply worried advocates for the poor launched impassioned campaigns yesterday to increase the Massachusetts sales tax to offset severe budget cuts, but business groups and residents immediately warned that Beacon Hill leaders will pay politically if they raise taxes in the midst of a historic recession.

While legislative leaders remained noncommittal, nearly three dozen House Democrats met behind closed doors yesterday to hammer out budget amendments, with consensus beginning to develop around pushing a sales tax hike and new local-option taxes. The tactic most commonly bandied about has been increasing the state's 5 percent sales tax to 6 percent. Resistance to the idea was swift and strong.

"It would be disastrous for the retail sector," said David Didriksen, who owns Willow Books & Café in Acton and is a member of the board of directors of the Retailers Association of Massachusetts. "To me that's the worst idea since New Coke. At the very time we need to have the least number of hurdles we can, they're going to drive consumers to New Hampshire and the Web." New Hampshire has no sales tax; sales taxes are not collected on most Internet sales.

The growing tax debate is sure to complicate the Legislature's consideration of another tax increase in coming weeks, a 19-cents-a-gallon gas tax hike proposed by Governor Deval Patrick. Raising the sales tax from 5 cents on the dollar to 6 cents would represent a 20 percent increase in the state sales tax and would produce about $750 million in new money for state coffers, according to some estimates.

"There is growing support for raising the sales tax," said Representative Ruth B. Balser, a Newton Democrat. "We can spend one more penny on the dollar when we purchase nonessential items and maintain our police force, fire, and teachers. Or we can hold onto that one penny and make those drastic cuts. That's a debate we're going to have."

A wide network that includes public health, social services, and public safety advocates is planning a series of rallies, letter- writing campaigns, and phone calls over the next week to lobby their local representatives to vote for new taxes.

House lawmakers this week released a $27.4 billion budget proposal that includes steep cuts in nearly every area touched by state government and would impose the greatest reduction in year-to-year spending in recent memory, with no new taxes. House Speaker Robert A. DeLeo has not taken a position on raising taxes and has said he would let House members debate the issue freely.

Senate President Therese Murray told reporters this week that she was still open to a sales tax hike, but added that most have ruled out any discussion of increasing the income tax.

"The income tax, I would suggest is dead on arrival," Representative Charles A. Murphy, the House chairman of Ways and Means, said yesterday in an interview. "Beyond that, I would say all options exist."

Patrick has been opposed to raising broad-based taxes such as general sales or income, a stance his spokesman said yesterday he still held.

"I have ruled it out, but also I don't want to be a jerk with the Legislature," Patrick said earlier this month during a WTKK-FM radio appearance.

Advocates say the case for a broad-based tax could not be stronger, with the state in desperate need of more revenue to offset deep cuts to social service programs. Critics of an increase say it makes little sense to discourage commerce at a time when the federal government is trying to encourage spending.

For a 37-inch plasma television, on sale now at Best Buy for $588, the sales tax would increase by nearly $6. Consumers would have to pay $15 more for a $1,500 Apple computer.

The Beacon Hill Institute released a study yesterday suggesting that increasing the sales tax would cause consumers to spend less money, resulting in 10,182 job losses and $41.3 million less in spending by businesses.

Still, Massachusetts has one of the lowest sales tax rates in the country. The state passed a 3 percent sales tax in 1966, and it was increased a decade later to 5 percent, where it has remained.

Shoppers and retailers at Faneuil Hall were evenly divided yesterday over whether lawmakers ought to consider a 1 percent hike in the sales tax, but they doubted that it would significantly change shopping patterns.

"I'm not for any more taxes. I've just about had it," said Jane Folkman, a Medfield resident who was paying $40.95 to purchase three pig figurines at Boston Pewter Co. (she would have needed 39 cents more if the sales tax were 1 percent higher). "I have a better idea. I think we should reduce the amount of representatives we have in state government."

Meanwhile, mayors from across Massachusetts yesterday blasted state lawmakers for cutting their funding, not providing new tools for them to raise revenue, and so far not pushing for broad-based tax increases.

"It is a pass-the-buck budget riddled in hypocrisy," Mayor Robert J. Dolan of Melrose said at a news conference attended by nearly 40 local officials at the Parker House in Boston.

While education aid would remain at this year's level, the portion of state aid dedicated to public safety, road maintenance, and other local services would be slashed an additional 25 percent. If the House budget is adopted, general local aid to cities and towns would have dropped by $426 million over two years.

"In 26 years as mayor, I have never seen such a lack of leadership on Beacon Hill," said Mayor John Barrett of North Adams. "When times are tough, we need leadership. Any fool can cut budgets."

John C. Drake of the Globe staff contributed to this report. Matt Viser can be reached at maviser@globe.com.

Governor Deval Patrick, who has proposed a gas tax increase, has been opposed to raising the sales tax.

RULED IT OUT