The MetroWest Daily News
Sunday, March 23, 2003
Tax on the brain:
Do you know what you are paying to the state
By Christopher Biondi, Sunday editor
Why are jogging bras exempt from the state sales tax while jockstraps are not? Diapers are exempt, but bed pans are not. A receiving blanket for a newborn is exempt, but blankets used in the crib are not.
Nonmedicated cough drops: exempt. Medicated are taxable.
Want a wig or hairpiece? Get you doctor to prescribe it. Otherwise, pay the sales tax.
While Gov. Mitt Romney is in reform mode, he and his staff may want to take a look at the hodgepodge of legislative and administrative rulings that direct how the state collects the money that accounts for about one-sixth of the state budget. The state collected about $3.7 billion in sales taxes in 2002.
The state takes 36 pages to explain the tax in a guide available on the Department of Revenue Web site. And a consumer or retailer who wants to know if the tax is being legally applied would have to carry the guide in his or her back pocket.
"People talk about it all the time, but nobody does anything," said
Barbara Anderson, executive director of Citizens for Limited
Taxation. "There is no plan, there is no logical outline. It's just seat of the pants."
The state sales tax -- 5 percent of the sales price or rental charge of certain goods -- was made law in 1967.
Exempted, of course, were most purchases of food and clothing, however takeout food and restaurant meals are taxed.
Other exemptions were included in the original law, and pages more have been added in the years since, either by amendment or DOR ruling.
And as the number and variety of consumer products grows, the Department of Revenue has faced some interesting questions.
For example, DOR spokesman Tim Connolly said a consumer recently called to complain that while the neighborhood store was not charging sales tax for energy bars, an online diet and nutrition retailer was.
DOR ruled that energy bars were not dietary supplements, which are taxable, but food, which is not.
"I think it is confusing at times for average consumers, but consumers tend to be a pretty vocal group, and we get calls on a regular basis from people who feel they were unfairly charged," said Connolly.
The list of exemptions for clothing, household and health care items provides some interesting examples.
Baby oil is exempt; baby lotion is not.
Breath mints are exempt; vitamins are not.
Comic books are exempt; the latest bestsellers are not.
Tennis clothing is exempt, but bowling shoes are not.
Shoe innersoles are exempt; shoe polish is not.
The uniform a waitress wears to work is exempt. The uniform a jockey wears to work is not.
Work clothes are exempt; protective helmets are not.
The DOR says that apparel designed solely for athletic or protective use is taxable, while items also suitable for everyday use are exempt.
Why, then, are are bathing suits and costumes not taxable?
"It would seem appropriate to take a fresh look at this and fix anomalies and areas that seem to be contradictions," said Michael Widmer, president of the non-partisan Massachusetts Taxpayers Foundation. "There are always going to be judgment calls, and it certainly should be reviewed every 10 or 20 years."
Anderson agrees the tax should be reviewed, but she fears the result if it is tackled during this fiscal crunch: "The proposal will be to tax everything."
Anderson recalled the time she went to a store to buy a tiny outfit for a Beanie Baby she had collected. When the clerk did not charge the tax, Anderson asked why.
The clerk said clothing was not taxable. The store manager looked on in exasperation, wondering how many more items the clerk had failed to tax.
"The chances this is being done according to the law are very slim," Anderson said.
State Sen. Richard Moore, D-Uxbridge, served on the taxation committee in the 1980s when a special commission reviewed state tax policy.
The sales tax was among the issues studied, but no changes were adopted, other than ordering the annual publication of tax exemptions and credits granted by the state.
"I think it probably is appropriate," Moore said of a sales tax review.
But in these times, he said the state is more likely to remove exemptions rather than add them.
"It certainly should be looked at to see what the reasons were for the exemptions," he said.
State Sen. Cheryl Jacques, D-Needham, serves on the Joint Committee on Taxation.
The original reasons for the exemptions, she said, were to protect the bare essentials -- food and clothing -- from taxation.
"But I think the exceptions have started to swallow the rule," she said.
Anne Brown, counsel to the Committee on Taxation, said regulations have built up over the years as the DOR attempted to practically apply the law's intent.
Brown pointed to baked goods: If you buy five doughnuts, you will be taxed, presumably because they can make a nice, if not particularly healthy, takeout meal.
A sixth doughnut, however, gets you more calories but also makes the purchase tax-free.
"Unfortunately, it is virtually impossible for statutes to define every single item," said Brown. "Doing away with all exemptions would clear the problem up, but generally we don't like to tax necessities."
"We get these questions all the time because there hasn't been any consistency," she said. "Some vendors would rather tax items in the gray area than face fines and penalties."
Not good news for the consumer.
Which brings us back to the jogging bra and the jockstrap.
DOR's Connolly called back with an official explanation: "The jogging bra lends itself to everyday wear, so therefore it's exempt just as clothes are. Athletic supporters, or jockstraps as they are more commonly known, are more athletic equipment/uniforms -- that sort of thing -- so they would fall under the taxable area."
It's enough to give you heartburn.
Antacids?
Taxable.
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The Lawrence Eagle-Tribune
Saturday, March 22, 2003
Travaglini sounds warning
By Shawn Regan
Staff Writer
New taxes, short-term borrowing and casino gambling could all be part of the Senate's plan to close a $3 billion state budget gap, Senate President Robert Travaglini told guests at a breakfast hosted by the Merrimack Valley Chamber of Commerce yesterday.
"Until we have an opportunity to identify the depth and severity of the cuts it will take to balance the budget, nothing is off the table," Travaglini, D-East Boston, said in response to a question at the Andover Country Club.
"Personally, I believe there needs to be some combination of all three," he said, referring to taxes, casinos and borrowing. "But it's going to be up to the Senate membership. I won't use my position to try to influence other senators."
The newly-elected senate president also had a message for mayors and town managers: Don't believe preliminary estimates from Romney about what you might receive in state money.
Travaglini said state aid reductions for next year could be much deeper than the already alarming levels forecasted in the governor's proposed 2004 budget. More cuts to lottery money, education funding and health and human services are all still possible, he said, adding that the Legislature will try to get municipal leaders its own local aid estimates in the coming weeks.
Travaglini said there are currently not many senators who would vote for new taxes, but added "that could change in three or four months when the severity of the cuts are realized."
A quick poll of senators at the breakfast -- Susan C. Tucker, D-Andover, Steven A. Baddour, D-Methuen, and Bruce E. Tarr, R-Gloucester -- showed none are eager to buck public sentiment on taxes, recently exemplified in the near-passage of a ballot initiative to abolish the state income tax and the election of Gov. Mitt Romney, who ran on a pledge not to raise taxes.
"We need to get lean and mean in state government before we even start talking about taxes, or we lose our edge," said Baddour, echoing comments by Tarr and Tucker.
Travaglini, whose first budget as senate president promises to be one of the tightest in recent history, took the opportunity to criticize some of the Republican governor's proposed money-saving reforms, while saying his is open to considering others.
Travaglini's comments about the University of Massachusetts suggest Romney will face opposition in the Senate to his plan to cut funding to the state college system by $100 million, spin off U-Mass Medical School as a private university, and eliminate the job of U-Mass President and former Senate President William
Bulger.
"I don't believe the state college system is broken," Travaglini said. "I believe it's a success story ... U-Mass Medical is an affordable medical school for those who can't afford schools like Harvard. In exchange for affordable tuition, we get four years from them in an urban center that is under served. I'll take that deal every time."
On the other hand, Travaglini said there are opportunities to close courthouses and raise some fees, referring to Romney's plan to close eight courthouses, including the one in Ipswich, and raise $60 million in new fees.
Overall, Travaglini called Romney's plan to solve the state's budget crisis "woefully short." He also said he is growing impatient with the governor's "fictitious proclamation" that there is $2 billion of waste in state government.
"In the governor's budget there are maybe $600 million in new fees and other reforms that may not be workable," said Travaglini, countering Romney's assertion that his budget saves $2 billion. "That's going to leave local aid, Medicaid and health and human services to make up the difference."
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