Limited Taxation
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CLT Update
Tuesday, February 2, 1999

Record tax revenue continues to pile up hand over fist, while the "temporary tax rate hike" promise moves into its tenth year, still broken, fractured.

Even with a state budget that has doubled to over $20 Billion in a mere dozen years and a state treasury engorged with cash, still the politicians refuse to keep their word. Still the pols refuse to return the excess taxes taken from us, for too long now under false pretense.

Soon the state coffers, awash in excess revenue, will have to make room for tens of millions, billions more from the "tobacco settlement." Maybe the pols will rent a vault or two from BayBank or the Bank of Boston in which to horde this profusion of revenue.

Or just spend it.

But keep a promise on Beacon Hill? -- keep their word and roll back the income tax rate to where it was before the fiscal crisis they created? -- make "temporary" again mean temporary instead of "until we sucker you next time"?

Return at least the excess to its rightful owners now that the fiscal crisis of the '80s is barely a bad memory, while they have more of our money than is necessary run government, even to fund the historic $20 billion state budget?

Return it?

Not without a fight! "It's MINE now," they believe: More Is Never Enough.

Chip Ford --

The Boston Globe
Tuesday, February 2, 1999

Cellucci cites revenue growth as reason to cut tax rate
By Hilary Sargent
Globe Correspondent

Adding fuel to Governor Paul Cellucci's call for a tax cut proposal, revenue figures released yesterday show January tax collections totaled $1.57 billion, a 10 percent increase over the same month last year.

The January collections bring revenues for the current fiscal year to $8.28 billion, 9 percent ahead of the previous year's totals, according to Acting Revenue Commissioner Bernard Crowley.

Yesterday's announcement may prove useful to Cellucci, who hopes to reduce the state's 5.95 percent income tax to 5 percent.

"It's a pretty compelling argument that this economy is strong," said Cellucci, adding that the best way to keep the economy strong is to "get that income tax back to 5 percent."

Income tax collections for January totaled $1.12 billion, up 4.6 percent from last year. The figure reflects the changes in withholding schedules, meaning that employers have already adjusted for new tax breaks.

In the current fiscal year, income tax revenues total $4.88 billion, an 8.6 percent increase over the previous year. Withholding tax revenues were $617.9 million, a 5.1 percent increase.

"We can see that performance is strong across the board," Crowley said.

Despite analysts' predictions that the Massachusetts economy could take a turn for the worse in the months to come, Cellucci said he expects "a good revenue year."

While the governor was optimistic, he did not dismiss the possibility that the economy's present strength may not last.

"I don't think we're going to see a turndown in the economy," Cellucci said. "I think what we're going to see is a slowing in the growth." He added that the state could see a budget surplus beyond the $350 million already projected.

House Speaker Thomas M. Finneran, however, heeded analysts' warnings and said a commitment to cut taxes would be premature.

Finneran said that while the January revenue figures show economic strength, the state should still be prepared for a possible downturn.

Finneran has suggested that if the House were to give a tax cut, it would probably be in the form of lowering the income tax to 5 percent, rather than increasing exemptions.


massseal.gif (3148 bytes)

Commonwealth of Massachusetts
Department of Revenue

DOR News Release
For Release: February 1, 1999
Contact: Ann Murphy, Jeffrey Busha
(617) 626-2251


Acting Revenue Commissioner Bernard F. Crowley, Jr. today announced that revenues for the month of January totaled $1.57 billion, an increase of 10.1 percent over January 1998. January collections bring year-do-date revenues to $8.28 billion, up 9.1 percent.

"January is a significant month for tax collections and we can see that performance is strong across the board. We are also issuing larger refunds during this tax filing season and we are seeing adjustments being made in withholding tax payments because of tax cuts passed last year which raised personal exemptions," Crowley said.

Income tax collections in January totaled $1.12 billion, up $48.9 million or 4.6 percent over January 1998. Withholding tax collections totaled $617.9 million, an increase of $29.8 million or 5.1 per cent. Corporate tax collections totaled $17.0 million, down $12.0 million or 41.4 percent. Sales and use tax collections totaled $315.4 million, up $118.3 million or 60.0 percent. This increase is largely due to the change made one year ago in the frequency in which businesses report sales and use tax. Adjusting for the change, sales and use tax growth is between 10 and 15 percent.

Year-to-date income tax collections total $4.88 billion, up $387.8 million or 8.6 percent. Withholding tax collections total $3.95 billion, an increase of $297.3 million or 8.1 percent. Sales and use tax collections total $1.93 billion, up $214.6 million or 12.5 percent. Corporate tax collections total $401.4 million, up $25.9 million or 6.9 percent.

The benchmark estimates for fiscal year 1999 have also been revised to reflect the $14.0 billion fiscal year 1999 forecast in House 1 which was released last week.


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