CLT Memo to the Joint Committee on Revenue
Tuesday, July 18, 2017

It’s Time to Roll Back the Sales Tax Hike


To:  Members of the Joint Committee on Revenue
July 18, 2016


Revenues did not meet “expectations” and state spending had to be reduced in the midst of the budget crisis.  The Boston Globe reported:

“State revenues took yet another plunge last month, ending the financial year $180 million below even the dourest projections and forcing leaders to choose between draining the state’s reserve account and making further cuts in a budget approved just last week....

“’June is the final exclamation point on this unbelievably bad year,’ said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded government watchdog.  ‘This is the worst year-to-year tax drop . . . in more than 50 years. Maybe ever.’’’

No, we’re not referring to current and recent events.  We are recalling 2009 and the Legislature’s passage of the second-largest tax increase in state history, more than $1 billion in additional revenue necessary to fund the FY 2010 state budget — of $27 billion.

Even adjusted for inflation ($30.5 billion) that $27 billion budget, with its billion-dollar tax increase, contained $10 BILLION less spending than the one just passed by this Legislature — 25 percent less.

The largest part of that 2009 tax increase was hiking the sales tax by 25% to 6.25 percent, estimated back then to generate some $700-$900 million of additional revenue.

On May 20, 2009 a Boston Herald editorial (“Truth about taxes”) accurately predicted:

“Ten years from now, the economic gods willing, Massachusetts will have recovered from this recession/depression.  But even if the economy is going gangbusters in 2019 you can bet we will still be paying that extra 1.25 percentage point on most every consumer good we buy....

“But the sales tax won’t come back to 5 percent, not once lawmakers become addicted to the new revenue.  Voters who OK’d the income tax rollback know this to be true....

“Taxpayers understand that desperate times sometimes call for desperate measures.  But they also know that, once on board, Beacon Hill will never willingly step off the gravy train.”

Such predictions are hardly difficult in Massachusetts, where taxpayers are still waiting for the “temporary” income tax hike of 1989 to be fully rolled back to 5 percent, twenty-eight years after the Legislature made that false promise.

Taxpayer cynicism in Massachusetts is deeply rooted and well-earned, fertilized by the Legislature with regularity.

This is your opportunity to change that perception, at least chip away at it.  It is a chance to show your taxpaying constituents that they too matter, that they also have unmet needs of their own which concern you as well.

Ten Billion Dollars in annual revenue — and spending — later, it is time to return the sales tax to 5 percent, time for a little relief for over-burdened taxpayers.

The fourth annual study of overall fiscal conditions in all fifty states was released last week by George Mason University's Mercatus Center.  It put Massachusetts third from the bottom, behind only Illinois and New Jersey, in fiscal management.  Investor's Business Daily summed up the study in its report last week:

"The bottom line is that the more money the state government takes from taxpayers, the worse it handles it.

"This should serve as a flashing warning to any state that thinks it can tax its way out of its fiscal problems."

We urge you to support H.1578 and S.1650 — roll back the sales tax to 5 percent.

Citizens for Limited Taxation    PO Box 1147    Marblehead, MA 01945    508-915-3665