CLT
UPDATE
Tuesday, June 3, 2003
Court rules prescription
"fee" a tax; kills it
Before the Legislature adds costs to the budget dependant upon these fragile “fees,” it
should weigh the odds on keeping them.
CLT NEWS RELEASE
May 23, 2003
Senate budget, taxes disguised as "fees"
One of the tax increases -- excuse me, "user fee" -- is a two dollar state charge on every prescription filled by a pharmacy for non-Medicaid funded prescription drugs (akin to the $3,300 "user fee" on nursing home beds for those who are paying their own way). That's a two dollar per-prescription-filled additional cost for most of us who pay our own way or carry health insurance....
Paying for your own nursing home stay, and/or paying for your own prescription drugs, obvious to even those of only average intelligence, do not qualify under that SJC ruling as a "fee" for there is no government service provided whatsoever.
CLT UPDATE
July 26, 2002
Beacon Hill "village idiots" exceed themselves
Massachusetts officials bungled the implementation of a $36 million prescription tax, rendering it invalid, and now must return the $18 million collected so far from the state's pharmacies, a Suffolk Superior Court judge ruled yesterday.
Judge Allan van Gestel rejected state officials' claims that they had obtained the federal approval needed to implement the prescription tax. He said they couldn't have obtained the approval anyway, since the measure was improperly drafted by the Legislature....
Van Gestel stated emphatically that the prescription tax, which the former acting governor, Jane Swift, and House lawmakers called an "assessment," was really a tax. "Despite political pronouncements to the contrary at the time of the enactment of [the law], what we are dealing with is an excise tax," van Gestel wrote.
The Boston Globe
Tuesday, June 3, 2003
State told to return $18m to druggists
Chip Ford's CLT
Commentary
We've again been asserting for a year now that a fee
cannot be levied for more than the cost of providing a specific
government service. Yesterday a Superior Court judge reaffirmed that
1984 state Supreme Judicial Court determination and our position.
Judge Allan van Gestel surely has given the
Legislature and Governor something to pause and reflect upon as both
have proposed up to $500 million in "fee" increases and new
creations in their respective budgets.
In further criticism his honor added, "'outside sections' of the Massachusetts budget are hardly the most appropriate way to adopt
legislation," and that's exactly where this year's new
"fees" are again tucked away.
The Senate woke up last week and quickly pulled down
the red flag: the "fee" on homeowner insurance. Will the
Beacon Hill crowd recognize the handwriting on the judicial wall and
reconsider the rest of their taxes disguised as illegal
"fees"?
Stay tuned to find out, but we just won an important
reaffirmation -- another victory for taxpayers and for the rule of law.
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Chip
Ford |
The Boston Globe
Tuesday, June 3, 2003
State told to return $18m to druggists
By Bruce Mohl, Globe Staff
Massachusetts officials bungled the implementation of a $36 million prescription tax, rendering it invalid, and now must return the $18 million collected so far from the state's pharmacies, a Suffolk Superior Court judge ruled yesterday.
Judge Allan van Gestel rejected state officials' claims that they had obtained the federal approval needed to implement the prescription tax. He said they couldn't have obtained the approval anyway, since the measure was improperly drafted by the Legislature.
The decision punches another hole in the state's budget, and may mean the controversial tax of $1.30 per prescription is dead. It was not clear if the Legislature would redraft the measure.
A spokesman for Representative John H. Rogers, a Norwood Democrat and chairman of the House Ways and Means Committee, would not comment. An aide to Governor Mitt Romney, who has pledged no new taxes, said the governor was studying his options.
Van Gestel stated emphatically that the prescription tax, which the former acting governor, Jane Swift, and House lawmakers called an "assessment," was really a tax. "Despite political pronouncements to the contrary at the time of the enactment of [the law], what we are dealing with is an excise tax," van Gestel wrote.
The decision was a major victory for the state's pharmacies. More than 100 pharmacies sued the state after seeing their profit margins squeezed by a series of fund-raising and belt-tightening initiatives launched by the Legislature. Most pharmacies earlier this year tried to pass the $1.30 tax along to their non-Medicaid customers, but started absorbing the cost themselves in February under pressure from Attorney General Thomas F. Reilly. Most pharmacies also refunded to customers any money they had collected.
CVS Corp. and the other big pharmacy chains, which stand to gain the most from van Gestel's ruling, said yesterday they welcomed the decision and expressed hope that the focus on Beacon Hill would now shift to more realistic cost-saving initiatives.
"We felt it was an unfair tax all along," said Walgreens spokesman Michael
Polzin.
Two independent pharmacies also praised the ruling.
Steven Grossman, the owner of J.E. Pierce Apothecary in Brookline, said he was "happy that the judge saw the error of this regulatory-legislative nightmare. I hope now we can concentrate our energies on creating a system of making medications available without putting out of business the providers of those medications."
Steve Bernardi, the owner of Johnson Drug in Waltham, which continued to pass the tax along to his customers, said he will begin refunding the money as soon as the state gives him back what he has paid. "This should let them know that they need to do their homework better," Bernardi said of the Legislature.
The prescription tax was intended to let the state raise money to offset the cost of Medicaid, the state-administered health insurance program for the poor and disabled that is jointly funded by the state and federal governments.
House lawmakers came up with the idea of charging pharmacies a per-prescription fee and spending the resulting funds on Medicaid. Assuming the state expenditure would be matched by the federal government, the lawmakers believed the $36 million state tax would generate a total of $72 million.
The whole concept was dependent on gaining federal approval for the tax. The state's Division of Medicaid Assistance, which administers Medicaid, said it had received that approval in a Dec. 23 letter from the federal Center for Medicaid Services.
But van Gestel disagreed, saying the letter was too vague to constitute approval. "What that correspondence shows, in plain language, was not federal approval of anything," he said.
In addition, van Gestel said, federal Medicaid participation requires that any state tax be broad-based, applying to all pharmacies. The law, as enacted, omitted certain pharmacies, and the Division of Health Care Finance and Policy rewrote its regulations to include them in the tax.
The judge said the division was in effect imposing a tax, which "it had no power to do."
In a jab at the drafting of the tax law, van Gestel said that "'outside sections' of the Massachusetts budget are hardly the most appropriate way to adopt legislation." He also cited a grammatical error in the law.
Over the last two months, CVS, Walgreens, Wal-Mart, and Stop & Shop have paid a total of $480,000 in fines to settle charges raised by Reilly that they misled customers when they posted signs at their counters earlier this year saying they were required to pass the $1.30 tax along to customers.
Although the chains refunded the money and the tax has been declared invalid, a spokesman for Reilly said the attorney general would not give the money back. "That's a completely separate issue," the spokesman said.
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