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CLT UPDATE
Saturday, January 21, 2012
Gov. Patrick proposes more taxes, fee hikes, as
usual
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Gov. Deval L. Patrick will propose increases in
state tobacco taxes next week, including a 50-cent-per-pack hike in
the cigarette tax and imposition of new taxes on cigars,
roll-your-own tobacco, pipe tobacco and smokeless tobacco.
The cigarette tax would give
Massachusetts taxpayers the fifth-highest cigarette tax
in the country and bring the tax on a pack of cigarettes
to $3.01....
David E. Sullivan, general counsel
for the state Department of Revenue, said yesterday that
the new tobacco taxes are expected to bring in $72.5
million a year in new state revenue.
Those funds will be used to cover
almost half the cost of the estimated $150 million in
health insurance subsidies for legal immigrants the
state is required to pay by a recent Supreme Judicial
Court ruling.
The cigarette tax is among $260
million in tax and fee increases and other money-making
measures Mr. Patrick will propose Wednesday as part of
his 2013 fiscal year budget....
The Telegram & Gazette
Saturday, January 21, 2012
Patrick eyes taxes on tobacco, sugar
Soda, candy tax eyed
Some of the $260 million in tax
increases, such as a sugar and soda tax, have been
proposed before and failed to pass. Republicans, who
control just a few seats in the Democratic-dominated
Legislature, quickly objected to the revenue hikes.
“One thing is clear,’’ House minority
leader Bradley H. Jones Jr. said in a statement. “The
Patrick administration has a sweet tooth for tax
increases.’’ ...
The Patrick administration
acknowledged that it would be another challenging budget
season, but also sought to highlight the state’s
progress recovering from the recent fiscal tumult. Local
officials took note of the $145 million in additional
education spending, which would bring total state aid
for local education to $4.1 billion, highest in state
history.
But the increase will not necessarily
mean more teachers or new supplies for the classroom.
The $145 million will cover costs that rise each year,
such as fuel, healthcare, and salary raises included in
labor contracts.
The Boston Globe
Saturday, January 21, 2012
Patrick administration avoids local aid
cut in budget proposal
News welcome to cities, towns
In a budget update letter to House
members Tuesday, House Ways and Means Committee Chairman
Rep. Brian Dempsey (D-Haverhill) said the state’s new
fiscal 2013 tax revenue estimate will give budget
writers $940 million more than this year’s estimated tax
revenue. The estimate of new revenue is more than a
billion dollars, or 6.9 percent higher than the original
estimate used to build this year’s budget.
But even though Patrick last summer
claimed the state had erased its longstanding structural
budget gap, it appears the expected infusion of taxpayer
funds won’t meet state’s expected spending demands.
In his letter, Dempsey, mirroring the
pre-budget warning signals from the governor’s office,
wrote, “These funds, while important, are almost certain
to be eclipsed by well publicized increases in mandatory
spending including Medicaid services for low-income and
disabled residents, debt service, public pensions and
collective bargaining agreements.” ...
During debate Wednesday on a $131
million spending bill that would boost fiscal 2012
midyear spending to about $282 million, Dempsey noted
the state recently added $350 million to its rainy day
account, bringing its balance up to $1.5 billion....
The fiscal 2012 budget weighed in at
$30.5 billion when Patrick signed it last summer....
In his own brief floor remarks,
Assistant Minority Leader Rep. George Peterson
(R-Grafton) said he supported spending in the $131
million bill on county sheriffs, adult day health
programs and low-income heating assistance. But Peterson
called it “astounding” that state government’s fixed
costs are on pace to fully consume anticipated new
revenues. Forecasting tough decisions about entitlement
programs, Peterson said the state needs to “get back to
a budget that is sensible.” ...
While noting “our opportunities for
creative solutions are also dwindling,” Dempsey didn’t
stake out any ground in his letter on his
budget-balancing preference, whether it be spending cuts
or new revenues or taxes. The state’s 2009 sales tax
increase was its last broad-based tax hike.
State House News Service
Friday, January 20, 2012
Dempsey sees ‘mandatory spending’
outpacing jump in tax collections
The increase in the cigarette tax
would mark the second time in his tenure that Patrick
has proposed raising the cigarette tax. In 2008, the
Legislature approved a $1 increase. The tax on a pack of
cigarettes would rise to $3.01 and the administration
will also propose applying the new, higher tax rate to
all other tobacco products sold in the state, according
to Patrick’s budget chief.
Under the governor’s plan,
Massachusetts would have the fifth highest tobacco tax
in the country, but still lower than New York and Rhode
Island, said Administration and Finance Secretary Jay
Gonzalez.
The tax increase would generate $73
million in additional revenue, and be dedicated to the
Commonwealth Care Trust Fund to cover half the cost of
accepting legal immigrants into the state’s subsidized
insurance program as mandated by a recent Supreme
Judicial Court Decision....
House Minority Leader Brad Jones
immediately criticized the plan, saying the state should
find other ways to balance the budget rather than
pulling money out of the economy.
“Is this part of the plan to help
balance the budget in New Hampshire?” Jones said,
calling the announcement “a Friday afternoon news dump”
that he predicted would “go up in smoke.”
The State House News Service
Friday, January 20, 2011
Cigarette tax hike among $260M in
revenue proposals sought by governor
The Senate unanimously supported a
$131 million spending bill Thursday that includes $21
million for low-income heating assistance, $35 million
for adult day health programs and $20 million for county
sheriffs' operations. The bill also includes $20 million
for state agencies' information technology costs and
funds various collective bargaining agreements.
The bill also halts a scheduled spike
in unemployment insurance costs for Massachusetts
businesses. The main provisions of the bill were backed
by the House on Wednesday and the bill could reach the
governor next week.
The State House News Service
State Capitol Briefs
Thursday, January 19, 2012
Senate backs spending bill with U.I.
rate freeze
Republican-led attempts to offer a
statewide meals tax holiday in mid-March were defeated
again Thursday, this time without a vote. The House
voted 116-39 Wednesday to send the idea to a study, a
move proponents said would kill the plan.
When the plan emerged Thursday in the
Senate as an amendment to a similar $131 million budget
bill, Sen. Bruce Tarr (R-Gloucester) was stopped short
of proposing the meals tax holiday....
Afterward, Tarr called the
amendment’s demise “another example of parliamentary
wizardry.”
The State House News Service
State Capitol Briefs
Thursday, January 19, 2011
Meals tax holiday plan "out of order"
in senate
We have to chuckle when we hear folks
on Beacon Hill talk about how much a tax holiday will
“cost” the state. The state doesn’t lay out one thin
dime for a tax holiday. The state treasury simply
collects less of your personal earnings and the receipts
of businesses than it would otherwise....
House lawmakers doomed the proposal
to a study (during debate on a $130 million, midyear
“mini-budget” — just the latest such addition to the
state’s spending tally this year). A similar effort
failed last year.
Restaurant diners would have been
spared the 6.25 percent sales tax on meals for six days,
from March 18-23....
But in grave tones House leaders
averred that the measure required a much deeper level of
scrutiny before it could be considered. Apparently a
year of languishing in committee was not sufficient time
to do the very simple calculations on what the holiday
would “cost.”
A Boston Herald editorial
Friday, January 20, 2012
Hungry for a tax break
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Chip Ford's CLT
Commentary
Here we go again, not enough revenue to keep
Bacon Hill fat and happy so we need to be taxed more. It never
ends, there's never enough.
They spend it as fast as it comes in
— even faster, then borrow more.
This week Bacon Hill passed yet another
"supplemental budget," $130 million more added to the $480 million
in October on top of the $30.6 Billion initial FY12 budget passed
last summer.
Money is no object. Just hit up the taxpayers for
more, more, more.
$150 million in health insurance subsidies for
legal immigrants? What ever happened to self-sufficient immigrants,
allowed in only if they can support themselves or have a sponsor?
The $145 million in additional education spending
the governor is proposing "will not necessarily mean more teachers
or new supplies for the classroom." Of course not, that'll come
later. That $145 million will merely "cover costs that rise each
year, such as fuel, healthcare, and salary raises included in labor
contracts." We've got to satisfy those government employees up
front. Later will come the sob stories of teachers, firefighters and
police lay-offs, when the next round of tax hikes are
desired.
Even without the Patrick tax hikes, even
with $1.5 Billion surplus stashed in the rainy day fund, "In
a budget update letter to House members Tuesday, House Ways and
Means Committee Chairman Rep. Brian Dempsey (D-Haverhill) said the
state’s new fiscal 2013 tax revenue estimate will give budget
writers $940 million more than this year’s estimated tax revenue,
the Boston Globe reported. "The estimate of new revenue is more than
a billion dollars, or 6.9 percent higher than the original estimate
used to build this year’s budget.
"But even though
Patrick last summer claimed the state had erased its longstanding
structural budget gap, it appears the expected infusion of taxpayer
funds won’t meet state’s expected spending demands."
Still they demand more, more, always more.
And More Is Never Enough (MINE)
— never will be if they can get away
with taking it.
At the bottom of the taxpayer heap are
smokers.
Whenever government needs more money, and it never has enough,
smokers are easy targets, the low-hanging fruit. Once again the
sledge hammer is being brought down on them with full force.
The risk to the rest of us taxpayers is,
government keeps pounding away at this minority, squeezing ever more
revenue to establish and fund expanding government programs. These
programs never go away nor ever solve the problems they're alleged
to address. Are government agents such as our insatiable governor
and the rest of his tax-borrow-and-spend horde deviously insincere,
don't expect their professed good intentions for further burdening
smokers to actually reduce consumption? Or instead, are they
ignorant of the Law of Diminishing Returns? They obviously expect
smokers will endlessly just 'cough up' whatever cost they impose,
over and over again.
But what if smokers don't suck it up again? What
if these victims decide they've had enough? What if enough of them
actually quit the habit?
What, and who, will replace that enormous
loss of revenue?
Let's take a look at what's at stake, the
unconscionable tax burden smokers currently bear alone
— bear alone for now.
You may recall CLT's crusade in 1998-99, when our
state attorney general joined with AGs from 45 other states in a
lawsuit against "Big Tobacco." The stated purpose of the lawsuit was
to seek reimbursement for the state's cost of treating sick smokers.
We noted at that time that those costs were already paid by
taxpayers, so any reimbursement gained should be returned to the
damaged party: Taxpayers.
CLT's "Tobacco Settlement"
Taxpayer Reimbursement Bill
The lawsuit ended with a "Master Settlement
Agreement" in November of 1998. It directed, among other things,
annual payments to the states in perpetuity. These payments
have been estimated to total more than $200 Billion over the first
25 years, "subject to various offsets, reductions and adjustments."
Our state's share of the base amounts under the
agreement through 2025 is nearly $8.96 Billion.
The tobacco companies quickly increased their
price per pack of cigarettes by 45¢ to recoup their cost of the
settlement. Corporations don't pay taxes, or settlements.
They simply pass the cost on to their customers. Massachusetts has
received some $250-$300 million every year since (e.g., $315.1
million in FY09; $263.7 million in FY10, and; $248.7 million in
FY11), and will continue receiving these sums "in perpetuity."
This amounts to a 45¢ per pack backdoor tax on smokers.
After a 50¢ a pack tobacco excise tax increase or two in the ensuing
years, in 2008, Bacon Hill passed and the governor signed a
$1-a-pack increase, bringing it to its current excise tax level
of $2.51-per-pack.
Also at about that time, tobacco products were
stripped of their sales tax exemption, imposing the sales tax on top
of the excise tax: a tax on a tax.
In Fiscal Year 2010, the tobacco excise tax alone
took in $456.2 million.
In Fiscal Year 2011, according to the latest
state comptroller's report, it was expected to produce $484 million.
Though I was unable to find a breakdown of the
sales tax taken from cigarettes sales alone, it can be approximately
calculated. A single pack of cigarettes, according to a number of
news reports, today sells for about $7.50-$8.00. The 6.25% sales tax
on $7.50 is 47¢.
FY11 excise tax (projected) $484 million,
divided by $2.51/pack = 192,828,685 packs sold
192,828,685 packs sold x $7.50/pack =
$1,446,215,137 total sales
$1,446,215,137 total sales x .0625 sales tax = $90,388,446
sales tax from cigarettes
For the privilege of buying cigarettes in
Massachusetts, last fiscal year smokers paid the state:
Tobacco Settlement: $248.7 million
(45¢ per pack)
Excise Tax: $484 million
($2.51 per pack)
Sales Tax: $90.4 million
(47¢ per pack)
Total taxes smokers paid to Massachusetts
last year: $823.1 million ($3.43
per pack)
Let's all hope the state doesn't finally kill the
golden goose — and leave the rest of us
holding the near-billion dollar bag!
And that's the state's take, on top of the
$1.01 per pack federal tax, increased from 39¢ in 2009
— bringing taxes on a $7.50 pack of
cigarettes to $4.44.
With government getting 59% of every sale, who
are you more afraid of: Big Tobacco, or Big Government?
But this is still not enough for Gov. Patrick.
He wants to add on another 50¢ per pack!
The next time you meet a smoker, make sure to say
thanks!
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Chip Ford |
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The Telegram & Gazette
Saturday, January 21, 2012
Patrick eyes taxes on tobacco, sugar
Soda, candy tax eyed
By John J. Monahan
Gov. Deval L. Patrick will propose increases in state tobacco taxes
next week, including a 50-cent-per-pack hike in the cigarette tax
and imposition of new taxes on cigars, roll-your-own tobacco, pipe
tobacco and smokeless tobacco.
The cigarette tax would give Massachusetts taxpayers the
fifth-highest cigarette tax in the country and bring the tax on a
pack of cigarettes to $3.01.
David E. Sullivan, general counsel for the state Department of
Revenue, said yesterday that the new tobacco taxes are expected to
bring in $72.5 million a year in new state revenue.
Those funds will be used to cover almost half the cost of the
estimated $150 million in health insurance subsidies for legal
immigrants the state is required to pay by a recent Supreme Judicial
Court ruling.
The cigarette tax is among $260 million in tax and fee increases and
other money-making measures Mr. Patrick will propose Wednesday as
part of his 2013 fiscal year budget.
Mr. Sullivan said about $62.5 million would come from the cigarette
tax hike and about $10.4 million from new taxes on other tobacco
products.
The governor is also reviving proposals previously rejected by the
Legislature to eliminate the sales tax exemption on candy and
sweetened soft-drinks and soda that would subject those products to
the state's 6.25 percent sales tax. Estimates are that the candy and
soda tax would generate $61.5 million annually, which would be
directed to public health programs.
Mr. Patrick will also propose expansion of the bottle bill to
require deposits on noncarbonated drinks and bottled water, which
would be expected to bring the state about $23 million in unclaimed
deposits. Of that amount, about $5 million would be allocated to
improved coordination of local recycling programs.
Other money raisers he will propose include:
● $5 million in new revenues from
advertising on state websites and vehicles.
● $5.8 million from fee increases
for new licensing of adult day care providers.
● Expanded nursing home fees.
● Increases in environmental
permit fees.
● $46 million from postponing a
tax deduction for large multistate corporations.
● $10 million from changes in the
way the state apportions payroll and sales factors in determining
corporate taxes.
● $7 million in new taxes from
markup of hotel room costs booked through out-of-state,
internet-based reservation companies not previously taxed.
● $500,000 from elimination of a
tax deduction for losing lottery tickets.
● $23 million from the use of new
technology to better enforce state tax collections and identity
taxpayers who underreport income.
The Boston Globe
Saturday, January 21, 2012
Patrick administration avoids local aid cut in budget proposal
News welcome to cities, towns
By Andrew Ryan
For the first time in four years, Massachusetts cities and towns may not
face deep cuts in local aid, the lifeblood that helps cities and towns
pay for police, trash pickup, tree trimming, and other services.
In its first volley of the budget season, the Patrick administration
said yesterday that it would keep state aid to municipalities level,
buoying the spirits of mayors, town managers, and selectmen as they
begin hammering out spending plans for the coming year.
“The good news is there isn’t bad news,’’ said Mayor Thatcher W. Kezer
III of Amesbury. “Revenues have stabilized. Local aid has stabilized.’’
In a speech before hundreds of municipal leaders, Lieutenant Governor
Timothy P. Murray offered upbeat but cautious highlights of the
administration’s proposed budget for the coming fiscal year, which will
be unveiled in its entirety Wednesday. The key point for cities and
towns was a plan to hold local aid at $833 million.
Murray also announced that state aid to local schools would be increased
by $145 million, or 3.6 percent. Money to fix local roads would be
augmented by an additional $45 million, giving cities and towns
resources to repair streets battered by last winter’s unrelenting snow.
The administration’s spending plan for the forthcoming budget year also
includes $260 million worth of proposed tax and fee increases, from
boosting the cigarette tax by 50 cents a pack to eliminating a tax
deduction for losing lottery tickets.
The budget is based on a modest rise in tax revenues, which are expected
to increase by 4.5 percent in the fiscal year that begins in July.
“That’s good news and part of an encouraging trend,’’ Murray said in a
speech at the annual meeting of the Massachusetts Municipal Association.
“But it doesn’t mean we’re out of the woods yet.’’
Rising costs from inflation, healthcare, and other expenses continue to
outpace the growth of tax revenues. To make up the difference, the
administration will propose some cuts, said Jay Gonzalez, Governor Deval
Patrick’s secretary of administration and finance, who would not name
specifics yesterday.
Some of the $260 million in tax increases, such as a sugar and soda tax,
have been proposed before and failed to pass. Republicans, who control
just a few seats in the Democratic-dominated Legislature, quickly
objected to the revenue hikes.
“One thing is clear,’’ House minority leader Bradley H. Jones Jr. said
in a statement. “The Patrick administration has a sweet tooth for tax
increases.’’
Yesterday’s speech by Murray marked the start of a months-long budget
process. Numbers, proposals, and tax revenues will change, perhaps
significantly, before a final budget is adopted for the next fiscal
year.
“It’s going to be very tight,’’ said Michael J. Widmer, president of the
Massachusetts Taxpayers Foundation. “There are going to be a number of
places where there are budget cuts.
“It’s better news than the last several years for sure, but it’s also a
fifth consecutive year of budget squeeze,’’ he said. “This is the
longest fiscal siege that state and local government have experienced in
decades.’’
The Patrick administration acknowledged that it would be another
challenging budget season, but also sought to highlight the state’s
progress recovering from the recent fiscal tumult. Local officials took
note of the $145 million in additional education spending, which would
bring total state aid for local education to $4.1 billion, highest in
state history.
But the increase will not necessarily mean more teachers or new supplies
for the classroom. The $145 million will cover costs that rise each
year, such as fuel, healthcare, and salary raises included in labor
contracts. The money will give all districts the same resources as the
current year. But in the recent fiscal climate, anything short of a cut
is good.
“They are telling districts not to push the panic button,’’ said Glenn
Koocher, executive director of the Massachusetts Association of School
Committees.
“I think the governor has gone out of his way to shield much of public
education from the impact of the last three years,’’ Koocher said.
“Schools across the country have been enduring really serious cuts.’’
Municipal leaders have also found new ways to cut costs, most notably
the state’s recently enacted municipal healthcare law.
Murray said that nine communities have already used the law to save more
than $30 million. The city of Beverly, for example, expects to save $1
million on health care, according to Mayor William F. Scanlon Jr.
The announcement yesterday that local aid would remain steady provided
more reason for optimism, even if other costs increase.
“After the cuts we’ve had in the past, to be level-funded this year,
it’s good news,’’ Scanlon said yesterday. “It’s not going to be easy,
but it’s going to be less hard this coming year.
“And it looks like there’s a little bit of sunshine out in front of
us.’’
State House News Service
Friday, January 20, 2012
Dempsey sees ‘mandatory spending’ outpacing jump in tax collections
By Michael Norton
A projected jump in state tax collections next fiscal year of more than
a billion dollars will likely be outpaced by “mandatory spending” in
four major areas, according to the House budget chief, who is also
warning of “dwindling” opportunities for creative solutions to state
budget problems.
In a budget update letter to House members Tuesday, House Ways and Means
Committee Chairman Rep. Brian Dempsey (D-Haverhill) said the state’s new
fiscal 2013 tax revenue estimate will give budget writers $940 million
more than this year’s estimated tax revenue. The estimate of new revenue
is more than a billion dollars, or 6.9 percent higher than the original
estimate used to build this year’s budget.
But even though Patrick last summer claimed the state had erased its
longstanding structural budget gap, it appears the expected infusion of
taxpayer funds won’t meet state’s expected spending demands.
In his letter, Dempsey, mirroring the pre-budget warning signals from
the governor’s office, wrote, “These funds, while important, are almost
certain to be eclipsed by well publicized increases in mandatory
spending including Medicaid services for low-income and disabled
residents, debt service, public pensions and collective bargaining
agreements.”
Gov. Deval Patrick’s budget chief Jay Gonzalez last week cited the same
four spending areas as on track to swallow up new revenue, and then
some, leaving the rest of state government on pace for an overall
reduction in spending, with limited increases and "many, many" programs
level-funded, some slashed, and others eliminated altogether.
Patrick plans to release his fiscal 2013 budget next Wednesday and
municipal officials are hoping for a preview of his approach to local
aid when Patrick speaks at a conference in Boston Friday morning.
Patrick’s budget chief Jay Gonzalez said last week that Patrick’s budget
bill will call for unspecified new revenues, but Gonzalez has previously
ruled out inclusion of a broad-based tax hike in the spending plan.
House Speaker Robert DeLeo may address tax burden issues in an address
planned later this month, but on Wednesday told the News Service he was
not yet prepared to take a firm position on new revenue as he did last
year when he ruled out new taxes and fees in late January.
“That’s one of the things I’m preparing to take a look at. I first want
to see what the governor has done and after that I’ll have a comment on
that,” DeLeo said.
During debate Wednesday on a $131 million spending bill that would boost
fiscal 2012 midyear spending to about $282 million, Dempsey noted the
state recently added $350 million to its rainy day account, bringing its
balance up to $1.5 billion. But he cautioned the economy is recovering
at a “very, very, very slow pace.”
“We are still not out of the woods in terms of our finances,” Dempsey
said.
The fiscal 2012 budget weighed in at $30.5 billion when Patrick signed
it last summer.
In his own brief floor remarks, Assistant Minority Leader Rep. George
Peterson (R-Grafton) said he supported spending in the $131 million bill
on county sheriffs, adult day health programs and low-income heating
assistance. But Peterson called it “astounding” that state government’s
fixed costs are on pace to fully consume anticipated new revenues.
Forecasting tough decisions about entitlement programs, Peterson said
the state needs to “get back to a budget that is sensible.”
In his letter, Dempsey cited two other developments, one involving the
loss of tax revenue and the other calling for new spending, as adding
pressure to the budget. Reductions in the income and corporate taxes on
Jan. 1 will subtract between $126 million and $132 million from the
state’s coffers and a recent high court ruling will require the state to
restore legal immigrant health coverage at a $150 million annual cost.
With Gov. Patrick a week away from releasing his latest annual spending
plan, the governor’s office has declined to estimate the gap between
projected state spending and revenues, though Gonzalez last week
predicted level-service spending demands would grow by $1.6 billion.
Senate budget chief Stephen Brewer last week estimated an $800 million
to $900 million gap. Dempsey, in his letter, suggested it could be even
higher, saying “it remains to be seen” whether the gap is as large as
the $1.5 billion fiscal 2012 chasm.
While noting “our opportunities for creative solutions are also
dwindling,” Dempsey didn’t stake out any ground in his letter on his
budget-balancing preference, whether it be spending cuts or new revenues
or taxes. The state’s 2009 sales tax increase was its last broad-based
tax hike.
Huge amounts of federal stimulus law funds helped the state bridge major
budget gaps during and since the recession, but those funds have been
exhausted and the state is receiving mixed signals from Washington about
aid levels, with warnings of deep cuts coupled with a new three-year
commitment to boost spending on Medicaid, the state’s biggest program,
by $5.7 billion, or 26 percent.
Dempsey said the fiscal 2012 state budget, midway through the fiscal
year, is meeting benchmarks, an indication that “it will make it through
the year in balance.”
Matt Murphy contributed reporting
The State House News Service
Friday, January 20, 2011
Cigarette tax hike among $260M in revenue proposals sought by governor
By Matt Murphy
Massachusetts smokers would pay more than $3 per pack in state taxes
under a 50-cent hike in the state cigarette tax Gov. Deval Patrick plans
to include in his budget next week, one of a series of revenue proposals
that Patrick hopes will generate $260 million in new revenue for his
spending plan.
The increase in the cigarette tax would mark the second time in his
tenure that Patrick has proposed raising the cigarette tax. In 2008, the
Legislature approved a $1 increase. The tax on a pack of cigarettes
would rise to $3.01 and the administration will also propose applying
the new, higher tax rate to all other tobacco products sold in the
state, according to Patrick’s budget chief.
Under the governor’s plan, Massachusetts would have the fifth highest
tobacco tax in the country, but still lower than New York and Rhode
Island, said Administration and Finance Secretary Jay Gonzalez.
The tax increase would generate $73 million in additional revenue, and
be dedicated to the Commonwealth Care Trust Fund to cover half the cost
of accepting legal immigrants into the state’s subsidized insurance
program as mandated by a recent Supreme Judicial Court Decision.
As in years past, Patrick will also call for the application of the
state sales tax to candy and soda, and an expansion of the bottle bill
to include water bottles, juices, coffee and sports drinks. Those two
proposals would generate $62.5 million and $22 million respectively,
with $5 million from the bottle bill expansion dedicated to recycling
programs and $10 million from the sales tax steered under an existing
formula to transportation and school building.
“This is something the governor has filed at least once, probably twice
before, that has good public policy benefits that discourages
consumption of products that are unhealthy for people that cost the
taxpayers more in public health costs,” Secretary of Administration and
Finance Jay Gonzalez said.
House Speaker Robert DeLeo, who led the push to hike the sales tax in
2009, earlier this week told the News Service he would wait to see
Patrick’s budget before taking a position on new fees and taxes for next
year, though in the past he has ruled them out early in the budget
process. The Legislature more than once has rejected Patrick’s call for
taxing candy and soda and expanding the bottle bill.
“That doesn’t mean we still don’t believe they’re the right things to
do, particularly the ones that have public health benefits and there’s a
lot of public support for them and that’s why the governor thinks it’s
important to seek them,” Gonzalez said.
House Minority Leader Brad Jones immediately criticized the plan, saying
the state should find other ways to balance the budget rather than
pulling money out of the economy.
“Is this part of the plan to help balance the budget in New Hampshire?”
Jones said, calling the announcement “a Friday afternoon news dump” that
he predicted would “go up in smoke.”
Gonzalez said the “tradeoffs” to these new revenue proposals would be
cuts to programs that are “in many ways on their last legs.” He declined
to estimate the extent of spending cuts that will be included in
Patrick’s budget.
Among the other revenue-generating proposals that Patrick plans to
include in his budget is a delay in the FAS 109 deduction which was a
component of the corporate tax reform law passed in 2008 giving certain
large multi-state corporations a deduction to absorb costs incurred by a
new combined reporting requirement. Delaying the implementation for one
more year will let the state keep $46 million in revenue, according to
Gonzalez.
The administration will also recommend applying the motel/hotel excise
tax to the full cost of a room, including the markup from Internet
resellers, for $7 million in revenue.
Two proposed changes to corporate tax law would include a new
calculation for corporate taxes on sales based on consumption rather
than sale origin, allowing Massachusetts companies that sell products
out of state to pay less, while outside companies selling to Bay State
consumers would pay more.
Subsidiaries of insurance companies that do not perform
insurance-related business would also be taxed as a general corporation
rather than on investments as insurance companies are currently taxed.
The two corporate tax changes would net the state $17 million.
The governor’s budget will also recommend eliminating the tax deduction
on losing Lottery tickets for $500,000; technology investments to better
identify and collect uncollected and underreported taxes for $22.3
million; $5.8 million in agency fee increases; and $5 million in
advertising revenue on state websites and vehicles.
Administration officials were not able to immediately list the fee hikes
but Gonzalez said a Department of Environmental Protection fee
associated with permitting would be raised to support the agency’s
budget.
Massachusetts received a grade of “F” for “severely underfunding proven
tobacco prevention and cessation programs,” with the state this year
spending less than 1 cent on preventing kids from smoking for every $1
it receives in tobacco-related revenue, according to an annual report
released Thursday by the American Lung Association.
The report gave Massachusetts a grade of “B” for its cigarette tax,
noting the loophole allowing a smaller tax on candy-flavored chewing
tobacco, dissolvable tobacco tablets and mini-cigars.
Massachusetts also got an “F” for inadequate coverage of services and
treatment to help smokers quit, but an “A” for its smoke-free workplace
law, which was approved in 2004.
The association and Tobacco Free Mass estimate tobacco kills more than
8,000 people per year in Massachusetts and accounts for 10 percent of
the state’s health care costs, or over $4.5 billion a year.
Kyle Cheney and Michael Norton contributed reporting
The State House News Service
State Capitol Briefs
Thursday, January 19, 2012
Senate backs spending bill with U.I. rate freeze
The Senate unanimously supported a $131 million spending bill Thursday
that includes $21 million for low-income heating assistance, $35 million
for adult day health programs and $20 million for county sheriffs'
operations. The bill also includes $20 million for state agencies'
information technology costs and funds various collective bargaining
agreements.
The bill also halts a scheduled spike in unemployment insurance costs
for Massachusetts businesses. The main provisions of the bill were
backed by the House on Wednesday and the bill could reach the governor
next week.
Sens. Robert Hedlund (R-Weymouth) Patricia Jehlen (D-Somerville) and
others used the debate on the catchall bill as a forum to vent
frustrations about the MBTA's fiscal woes.
Hedlund ripped MBTA officials for pursuing expansion projects like the
Greenbush Commuter Rail Line – which he said is subsidized at $38 per
ride – and a rail line to connect Boston with Taunton and Fall River.
"Either it's ignorance over at the T or they just don’t know how to run
their house," added Sen. James Timilty (D-Walpole).
Backers of both extensions, as well as a legally mandated extension of
the Green Line subway into Medford and Somerville, argue that they're
important economic engines, will lure businesses and contribute to
economic development.
Hedlund argued that even with potential job creation that comes with
rail expansions, the state must also find a way to pay for ongoing
operation and maintenance of the new lines.
The remarks came during a debate on an amendment Hedlund offered to
block all MBTA expansion projects unless a funding source is identified.
The Senate backed a redrafted version of the amendment, the details of
which were not immediately available following the session.
"What this amendment seeks to do is say to the administration, the
executive branch, no more expansion until you show us how we pay for any
intended new expansion, or until we have the finances under control,"
Hedlund said.
The State House News Service
State Capitol Briefs
Thursday, January 19, 2011
Meals tax holiday plan "out of order" in senate
Republican-led attempts to offer a statewide meals tax holiday in
mid-March were defeated again Thursday, this time without a vote. The
House voted 116-39 Wednesday to send the idea to a study, a move
proponents said would kill the plan.
When the plan emerged Thursday in the Senate as an amendment to a
similar $131 million budget bill, Sen. Bruce Tarr (R-Gloucester) was
stopped short of proposing the meals tax holiday. Senate President
Murray ruled the amendment out of order because it dealt with state tax
revenues. The Senate is not constitutionally allowed to initiate changes
to taxes deposited into the general fund, only the House of
Representatives, according to the House clerk.
Murray and Tarr went back and forth for several minutes, arguing over
the amendment’s constitutionality. Tarr insisted the supplemental budget
did contain a provision that affected state taxes: the proposed freeze
of the unemployment insurance rate. Murray said the unemployment
insurance rate was an assessment on companies, not a tax, and premiums
do not go into the state’s general fund. Murray said the Senate could
not debate establishing a new tax suspension. Tarr challenged her
ruling, which stood with a 31-4 vote.
Afterward, Tarr called the amendment’s demise “another example of
parliamentary wizardry.”
The Boston Herald
Friday, January 20, 2012
A Boston Herald editorial
Hungry for a tax break
We have to chuckle when we hear folks on Beacon Hill talk about how much
a tax holiday will “cost” the state. The state doesn’t lay out one thin
dime for a tax holiday. The state treasury simply collects less of your
personal earnings and the receipts of businesses than it would
otherwise.
The chuckle turns to outright laughter when the allegedly prohibitive
“cost” is somewhere in the low millions. The sales tax holiday that the
state observed last August amounted to a $20 million hit to the
treasury. The state budget, by comparison, is in the neighborhood of $30
billion. As our friend George F. Will would say, that “cost” of the tax
holiday essentially amounts to a rounding error in the state ledger.
Nevertheless the folks who control the public purse strings this week
decided to kill an attempt to extend a bit of relief to restaurants,
their workers and the public by refusing to authorize a meals tax
holiday in March. House lawmakers doomed the proposal to a study (during
debate on a $130 million, midyear “mini-budget” — just the latest such
addition to the state’s spending tally this year). A similar effort
failed last year.
Restaurant diners would have been spared the 6.25 percent sales tax on
meals for six days, from March 18-23. Local option taxes on meals, which
cities and towns are authorized to impose, would have remained in
effect. The bill’s sponsor estimated the state would forego $8.8 million
in tax receipts that week.
Restaurant industry leaders say that like the sales tax holiday, a
six-day break on restaurant meals would boost business during what is
typically the slowest month for dining out, increasing the take-home pay
for restaurant workers and having a ripple effect on vendors.
But in grave tones House leaders averred that the measure required a
much deeper level of scrutiny before it could be considered. Apparently
a year of languishing in committee was not sufficient time to do the
very simple calculations on what the holiday would “cost.”
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