CLT UPDATE
Tuesday, August 23, 2011
A Bacon Hill committee that never rests
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You could hide out from the police at the State
House these days, things are so quiet up there. And yet somehow the
Joint Committee on Revenue found time in their summer schedule to
vote in favor of a brand new tax on thousands of purchases that Bay
State residents make every day. Gee, why aren’t we surprised?
A Boston Herald editorial
Tuesday, August 23, 2011
Taxing summer for pols
While most legislative committees have taken
a hiatus for the summer recess, the Committee on Revenue last
week quietly endorsed legislation designed to allow the state to
begin collecting sales taxes on online purchases, a proposal
that supporters say would boost state coffers by $335 million
per year but which is fraught with the hardball politics of tax
policy debates.
The bill (H 3672) was polled out of committee
on an 8-2 vote and is designed to allow the state to collect the
6.25 percent sales tax from online, mail and phone vendors, even
those without a physical presence in the state, who sell taxable
items to state residents. To do so, Congress would need to pass
enabling legislation, but the bill would add Massachusetts to 24
states seeking a streamlined sales and use tax agreement.
The State House News Service
Friday, August 19, 2011
Internet sales tax clears committee, supporters claim fairness
is issue |
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Chip Ford's CLT
Commentary
While the rest of the "full-time" Legislature has
taken its usual vacation for the entire summer, one committee never
rests: The Joint Committee on Revenue, which used to be called
The Joint Committee on Taxation before the vocabulary was
politically corrected.
You know, taxes are now called "revenue";
spending is called "investments"; and tax cuts are now termed "tax
expenditures."
Aren't "tax expenditures" in fact spending
in the common vernacular? Nope, today spending is "investments." I
don't blame you if you're confused too.
But sleep well: The Joint Committee on
Revenue is working overtime — for
simple "tax fairness" don't you know? Boosting state coffers
by $335 million per year in sales tax "revenue" is only "fair."
We're soon going to need translation software to
understand this doublespeak.
The rationale for this tax grab is that citizens
are buying online, through catalogues, and over the phone from
out-of-state vendors simply to avoid the state's 6.25 percent sales
tax.
“The outstanding success of the sales tax holiday shows how much
frankly the sales tax is as a consumer motivator. That
speaks to the fact that if they have the opportunity to avoid the
sales tax, more times than not or too often they will take that
opportunity,” observed Jon Hurst, president of the Retailers
Association of Massachusetts, a leading advocate. Hurst has
recognized the obvious. I wonder how long it took for him to reach
this conclusion? Whatever he's being paid as the association's
president and lobbyist, I could have provided that insight for much
less.
I've got a simple deal for the
tax-borrow-and-spend pols on Bacon Hill.
I'll gladly pay your sales tax on online
purchases — if you'll pay my
shipping costs.
I don't want to unduly alarm you. Our
Democrat-dominated Legislature can pass or not pass this bill
— but it's meaningless until the
federal government imposes it, and that has failed for fifteen
years. Much of our thanks for that failure goes to CLT member Grover
Norquist, founder and president of the Washington-based Americans
for Tax Reform. (Latest
news from ATR)
But leave it to the Taxation Committee
— oops, excuse me, the Joint Committee
on Revenue — to surrender its members'
summer vacation in order to devise new means and methods of
extracting ever more from us taxpayers. This, on Bacon Hill, is
certainly defined as "commitment."
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Chip Ford |
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The Boston Herald
Tuesday, August 23, 2011
A Boston Herald editorial
Taxing summer for pols
You could hide out from the police at the State House these days,
things are so quiet up there. And yet somehow the Joint Committee on
Revenue found time in their summer schedule to vote in favor of a
brand new tax on thousands of purchases that Bay State residents
make every day. Gee, why aren’t we surprised?
At a time when many shoppers were still basking in the glow of the
Aug. 13-14 sales tax holiday (or soaking up the final rays of
summer) committee members voted 8-2 to support a bill that would
allow the state to begin collecting sales tax on Internet purchases,
even when the vendor has no physical presence in Massachusetts.
Hey, they’ve gotta start making up that “lost” revenue somehow!
Certain tax-happy lawmakers argue these are taxes that are already
“owed,” and that this is a simple matter of “fairness” and tidying
up paperwork. Retailers, meanwhile, say the absence of sales tax on
many Internet purchases puts them at a competitive disadvantage.
There’s a similar bill pending in Congress, which would give states
blanket power to chase down taxes from local shoppers buying from
vendors in far-flung states.
Rep. Jay Kaufman (D-Lexington), who co-chairs the Committee on
Revenue, told the State House News Service that there is
“considerable demand” for the legislation in Massachusetts.
But that demand sure as hell isn’t coming from consumers, who stood
in long lines and circled shopping mall parking lots for ages just a
few weeks ago — and it wasn’t because a 6.25 percent discount is
such a fantastic deal.
It was because the holiday represents a tiny reprieve from the
duties collected by their government, and adding to that burden is
neither fair nor a crowd-pleaser, even when it’s wrapped in a
scholarly explanation about “collection and remittance.”
Democrats keep saying we need another round of stimulus to spur
consumer spending and job creation, but slapping a new tax on
purchases is hardly the way to coax consumers out of hibernation.
The State House News Service
Friday, August 19, 2011
Internet sales tax clears committee, supporters claim fairness is
issue
By Michael Norton and Matt Murphy
While most legislative committees have taken a hiatus for the summer
recess, the Committee on Revenue last week quietly endorsed
legislation designed to allow the state to begin collecting sales
taxes on online purchases, a proposal that supporters say would
boost state coffers by $335 million per year but which is fraught
with the hardball politics of tax policy debates.
The bill (H 3672) was polled out of committee on an 8-2 vote and is
designed to allow the state to collect the 6.25 percent sales tax
from online, mail and phone vendors, even those without a physical
presence in the state, who sell taxable items to state residents. To
do so, Congress would need to pass enabling legislation, but the
bill would add Massachusetts to 24 states seeking a streamlined
sales and use tax agreement.
While critics of the idea have portrayed the initiative as a new tax
and an impediment to economic growth, Jon Hurst, president of the
Retailers Association of Massachusetts, said it’s about collecting
taxes that are already due and cautioned that income, property and
corporate tax revenue streams, in addition to unpaid sales taxes,
are drying up as often tax-free online sales overwhelm so-called
Main Street retailers.
Mindful of the growing use of smart phones, retailers are luring
more customers online, offering apps that can deliver item price
comparisons and quickly ship products to the homes of purchasers.
“The online sales just continue to grow,” he said. “The time has
come. We’ve been talking about this for about 15 years. We’ve got to
solve this or our Main Street retailers aren’t going to survive
another 10 or 15 years.”
U.S. Sen. Dick Durbin (D-Illinois) in April filed federal
legislation requiring sellers to collect sales taxes owed under
current law regardless of whether sellers had a physical presence in
a particular state. Durbin estimated states were collectively losing
$37 billion in taxes on internet and catalogue sales. His bill would
certify an interstate system to “streamline and harmonize” sales tax
rules and provide states with explicit authority to require all
retailers to collect sales taxes.
While Durbin said the National Governors Association and the
National Conference of State Legislatures supported his Main Street
Fairness Act, the proposal faces strong opposition from groups like
Americans for Tax Reform, which claims the bill “would permit a
small cartel of states to reach outside of their borders to force
individuals and businesses who aren’t even residents to collect
taxes.” The group further called the bill a “threat to federalism,
accountable government and interstate commerce.”
With the 2012 election cycle gearing up already, Hurst sees a “very
difficult” path toward Congressional action on internet sales tax
reforms, but framed the issue as a way for the federal government to
shore up state revenues as it looks to cut back on its own spending
around the nation and reduce its deficit.
Revenue Committee Co-chairman Rep. Jay Kaufman (D-Lexington) also
said he hoped the debate over deficit reduction would spur federal
lawmakers to empower states to collect taxes owed to them.
“There is considerable demand for it here and as part of the federal
deficit reduction conversation there’s some possibility that
Congress will empower states to collect a tax that’s already due,”
Kaufman said.
Kaufman said some vendors in states that have passed the Main Street
Fairness Act have voluntarily agreed to collect and remit relevant
sales taxes - consumers in Massachusetts are technically already
required to pay sales tax on purchases made out-of-state or online
for use here, but the “use tax” requires individuals to report those
purchases voluntarily on their tax returns.
The issue is complicated by jurisdictional and collection issues,
but Hurst argues that streamlining definitions and establishing
clear lines of authority will help states begin to collect a tax
that online shoppers, always hunting for the best prices, have come
to view as “essentially an optional tax.”
Massachusetts retailers say online sellers got a further leg up on
stores in 2009, when House Speaker Robert DeLeo led the effort to
raise the sales tax rate from 5 percent to 6.25 percent. Since then,
legislative leaders and Gov. Deval Patrick have shown little
interest in raising or lowering tax rates, instead deploying
spending cuts, using reserves and deferring pension payments to
balance the budget.
With the economy struggling, there appears little appetite to take
on another fight over tax policy.
“There isn’t a whole lot of desire on Beacon Hill to deal with
taxes,” Hurst said. “We would argue this isn’t a new tax. What it is
about is tax fairness. The tax is due. It’s really an issue of
collection and remittance.”
Asked about the odds of advancing the bill, Kaufman said, “It’s
certainly a priority for me. I can’t speak for my colleagues, so I
know I have a bit of a sales job to do. The bar is fairly high for
any bill that deals with taxes. I get it. This is a piece that’s
really about fairness and business and jobs in the Commonwealth.”
The state suspended its sales tax last weekend in a bid to stimulate
commerce and Hurst called it a “huge weekend” for sales, mentioning
a furniture store that registered 8 percent of its total annual
sales.
“The outstanding success of the sales tax holiday shows how much
frankly the sales tax is as a consumer motivator,” Hurst said. “That
speaks to the fact that if they have the opportunity to avoid the
sales tax, more times than not or too often they will take that
opportunity.”
Lt. Gov. Tim Murray this week declined to check in on the debate
over sales tax collections.
Asked about the pending legislation in Congress and Massachusetts,
Murray said, “I’m not really up to speed on it. Until I get educated
on it, I’m reluctant to comment.”
The Revenue Committee also voted 10-1 to approve a bill (H 2540)
creating a standing commission to review and evaluate all tax breaks
and make recommendations concerning the effectiveness of tax breaks.
The commission would make recommendations by the end of each year
during a three-year review.
The legislation also requires new tax breaks to include stated
public policy objectives, a deadline for lawmakers to review the
break to determine its costs and benefits, and an evaluation to
consider whether a sunset or clawback should be applied.
Kaufman said the tax expenditure review would encourage members of
the commission to consider eliminating certain exemptions. He said
he hoped lawmakers would be open to broader-based taxes with lower
rates rather than the existing menu of taxes accompanied by a long
list of exemptions.
“The way we’ve been thinking about looking at the tax expenditure
budget is to think about the fact that we have so many exemptions to
all our major taxes, were we able to get rid of some of those we
could give consideration to lowering the overall rate,” Kaufman
said.
He said the committee bill closely resembles language include in an
outside section of the fiscal 2012 budget, but would make the tax
expenditure review an annual exercise rather than a one-time event.
Under a change to the bill adopted before it cleared committee, the
nine-member commission was expanded to 13 members, with the addition
of representatives from the state’s auditor’s office, the state
treasurer’s office and two members of the Governor’s Council of
Economic Advisors.
That bill’s supporters in the House include Kaufman and Reps.
Jennifer Benson, Alice Wolf, Stephen Kulik, Elizabeth Malia and
Denise Andrews. Sen. James Eldridge is backing the bill in the
Senate.
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