CLT UPDATE
Thursday, February 1, 2018
Dump the Sales Tax Hike
An after-action debrief by Chip Faulkner
Communications Director
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Nearly
nine years after lawmakers hiked the sales tax in the teeth
of the Great Recession, the state "simply cannot afford" to
bring the tax on purchases back down to 5 percent, a
lobbyist for the umbrella labor group AFL-CIO told lawmakers
on Wednesday. The Revenue Committee on Wednesday received
input from municipal, labor and transportation group
representatives who want to keep the sales tax where it is,
and spokespeople for retailers and small businesses who
support lowering the tax from 6.25 percent to 5 percent and
instituting an annual sales tax holiday.
If lawmakers don't pass the initiative petition proposal
by May 1, proponents could collect about 11,000 signatures
to place the measure (H 4114) on the November ballot. While
millions might weigh in on the idea in voting booths later
this year, Wednesday's hearing was relatively sparsely
attended, wrapping up testimony on the bill in about 30
minutes.
After the hearing, Retailers Association of Massachusetts
President Jon Hurst, who spearheaded the citizens'
initiative, said the decision about whether to put the
measure on the ballot could depend on whether a separate tax
question is cleared for consideration by voters.
The Supreme Judicial Court on Tuesday will hear a case
challenging the constitutionality of a proposed
constitutional amendment to add a 4 percent surtax on
incomes over $1 million – which is projected to generate
roughly $2 billion for transportation and education
priorities.
"I think a key question will be whether or not the SJC
knocks off that 4 percent income tax surcharge. If they
don't knock it off, I don't see much of a path for us to
take this off the ballot because this gives voters a
once-in-a-generation opportunity for passing a progressive
tax reform, combined," Hurst told the News Service. The
sales tax disproportionately hits seniors on fixed incomes
and low-income families, Hurst said.
The proposed sales tax cut would cause the state to
forego about $1.3 billion in annual revenues, according to
the Massachusetts Taxpayers Foundation and others....
While the economy as a whole is in the midst of a
years-long upswing, the brick-and-mortar retailers have been
left behind, according to Hurst.
"It was the wrong increase at the wrong time and it has
been extremely devastating to stores across the state and it
has led to dark storefronts, and it's going to lead to more
unless we fix this sales tax problem," Hurst told the News
Service.
State House News Service
Wednesday, January 31, 2017
SJC decision may dictate fate of sales tax cut, Hurst says
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Chip Faulkner's CLT
Commentary
Last week I appeared in the State House
before the Transportation Committee testifying against a
bill to expand tolls on major highways around the state.
Seven days later CLT was back at it again, however this
time testifying in favor of a bill that would benefit
the taxpayers. It was
H.4114, the initiative petition that would lower the
sales tax rate from 6.25% to 5%.
The rate was increased in 2009 due to an alleged crisis
in state revenues and so-called budgetary needs.
This initiative was being heard before the Joint
Committee on Revenue in Room B-2 at the State House.
Unusual for this hearing was that I actually had
allies (for a change) who showed up to support my
testimony. Before they did, a union representative from
the AFL-CIO told the usual horror stories about cutting
as much as one cent from the bloated $40 billion state
budget.
Then our allies — Jon Hurst, president of the Retailers
Association of Massachusetts and Chris Carlozzi, head of
the Massachusetts chapter of the National Federation of
Independent Business (NFIB) — were up next. Both gave
insightful, detailed testimony of how the increase has
put Bay State small businesses at a competitive
disadvantage with those outside our state border.
My testimony opened with a recitation of CLT successes
at the ballot box, including Prop 2½ and the income tax
rollback. This latest initiative, cutting the sales tax
rate, is a continuation of that pro-taxpayer movement.
When the Legislature won’t act or address a serious
problem, activists hit the streets collecting
signatures, putting the solution to that problem on the
state ballot for their fellow citizens to decide.
Jon Hurst has led this latest drive and CLT was there to
help him. During my testimony, I pointed out that since
the sales tax hike was enacted the state budget has
ballooned to over $40 Billion, the economy has
rebounded, state revenue has grown, housing prices
increased — yet we are still paying that increase!
Opponents of H. 4114 say the state will lose over a
billion dollars if the sales tax rate goes back to 5%.
But who will gain if this happens? I told the Committee
the consumers of Massachusetts will gain by saving over
a billion dollars they will not have to pay to the state
on purchased items.
If the state government wants to find areas to make
savings in addressing the “shortfall,” I recommended
looking at the state’s exorbitant costs of our roads and
highways. I brought up last week’s testimony before the
Transportation Committee during which I cited statistics
showing Massachusetts spends three times more than
the national average on maintenance per mile and
from that same study, seven times as much on
administrative costs. You could come up with
hundreds of millions in savings if this huge disparity
alone was corrected. This information was again met with
blank stares from the committee just like the week
before.
My last point was an anecdote from 2009. Shortly after
the Legislature passed the sales tax hike, I gave a talk
to a group of activists in Concord, New Hampshire.
During my speech, I mentioned the then-recent sales tax
hike. Immediately the crowd started cheering, some even
standing and applauding for a couple of minutes.
Afterwards these folks said they loved “Taxachusetts” —
their mantra: “Every time you guys increase a tax, a
flood of tax refugees comes over our southern border to
either move here, shop, or do both.”
Note: Continuing in the fine tradition of hearings
I’ve attended in the last year or so, very few committee
members showed up. This hearing, even by legislative
standards, had exceptionally low committee attendance.
Only the Senate and House chairmen plus Sen. Ryan
Fattman (R-Webster) were present — just 3 out of 17!
And once again, no questions from the committee were
asked after I testified. I guess I must have wowed them
into silence.
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Chip Faulkner
Communications Director |
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State House News Service
Wednesday, January 31, 2017
SJC decision may dictate fate of sales tax cut,
Hurst says
By Andy Metzger
Nearly nine years after lawmakers hiked the
sales tax in the teeth of the Great Recession,
the state "simply cannot afford" to bring the
tax on purchases back down to 5 percent, a
lobbyist for the umbrella labor group AFL-CIO
told lawmakers on Wednesday.
The Revenue Committee on Wednesday received
input from municipal, labor and transportation
group representatives who want to keep the sales
tax where it is, and spokespeople for retailers
and small businesses who support lowering the
tax from 6.25 percent to 5 percent and
instituting an annual sales tax holiday.
If lawmakers don't pass the initiative petition
proposal by May 1, proponents could collect
about 11,000 signatures to place the measure (H
4114) on the November ballot. While millions
might weigh in on the idea in voting booths
later this year, Wednesday's hearing was
relatively sparsely attended, wrapping up
testimony on the bill in about 30 minutes.
After the hearing, Retailers Association of
Massachusetts President Jon Hurst, who
spearheaded the citizens' initiative, said the
decision about whether to put the measure on the
ballot could depend on whether a separate tax
question is cleared for consideration by voters.
The Supreme Judicial Court on Tuesday will hear
a case challenging the constitutionality of a
proposed constitutional amendment to add a 4
percent surtax on incomes over $1 million –
which is projected to generate roughly $2
billion for transportation and education
priorities.
"I think a key question will be whether or not
the SJC knocks off that 4 percent income tax
surcharge. If they don't knock it off, I don't
see much of a path for us to take this off the
ballot because this gives voters a
once-in-a-generation opportunity for passing a
progressive tax reform, combined," Hurst told
the News Service. The sales tax
disproportionately hits seniors on fixed incomes
and low-income families, Hurst said.
The proposed sales tax cut would cause the state
to forego about $1.3 billion in annual revenues,
according to the Massachusetts Taxpayers
Foundation and others.
The retailers have a May 9 board meeting when
the group will decide whether to forge ahead
towards the ballot with the sales-tax-cutting
proposal, and the group has not taken a position
on the income surtax, Hurst said. The high court
generally aims to decide cases within 130 days
of oral argument, meaning a decision in the
income surtax challenge might not be issued
until mid-June.
John Drinkwater, legislative director for
AFL-CIO of Massachusetts, said the state can't
afford to lose out on sales tax revenue, and
claimed "despite a lot of the doom and gloom"
from the retail industry, employment in the
sector has increased each year since 2010.
Those rising employment figures include
restaurant workers as well as staff that help
deliver online purchases to consumers, according
to Hurst.
In the depths of the financial crisis in 2009,
House Speaker Robert DeLeo pushed through an
increase in the sales tax to help shore up
cratering state revenues. Since then the
Winthrop Democrat has mostly held the line on
broad-based tax increases, though he did support
a 3-cent-per-gallon hike in the gas tax and a
$1-per-pack hike on the cigarette tax in 2013.
While the economy as a whole is in the midst of
a years-long upswing, the brick-and-mortar
retailers have been left behind, according to
Hurst.
"It was the wrong increase at the wrong time and
it has been extremely devastating to stores
across the state and it has led to dark
storefronts, and it's going to lead to more
unless we fix this sales tax problem," Hurst
told the News Service.
While state tax revenues have outperformed
expectations in recent months, annual tax hauls
have come up short in prior years, leading to
midyear cuts.
Bringing the sales tax back down to 5 percent
would lead to spending cuts of 6 to 7 percent
that would "hit every community," claimed Chris
Dempsey, director of Transportation for
Massachusetts.
The Massachusetts Municipal Association also
opposes the sales tax cut, said the
organization's legislative director John
Robertson, who warned it would harm local aid.
Lowering the sales tax has been a policy aim of
prominent pols from both parties in recent
years.
Former Gov. Deval Patrick proposed scaling the
sales tax down to 4.5 percent, eliminating tax
breaks and hiking the income tax while also
doubling the income tax exemption as part of a
package to increase revenues by $2 billion. That
proposal went nowhere in the Legislature.
Gov. Charlie Baker in 2010 ran unsuccessfully on
a platform pledging to reduce the sales, income
and business taxes to 5 percent, but he backed
off from that tax-cutting stance before winning
the Corner Office in 2014.
"We hope to have a conversation with Governor
Baker and tell him why this is important," Hurst
told the News Service on Wednesday. He said, "I
think he gets that there's a problem."
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
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