“I don’t think it’s that. And they didn’t think it was that until the eleventh hour. You know like with every change in the tax laws, or every change in regulation or law that affects businesses we want to watch it as we go along. But at the same time, those same business and those same business leaders believe it is important for our growth to invest in our transportation infrastructure and that’s what we are going to do,” Patrick said.
Hunt sees the service sales tax opening the door for taxes on other services, an issue that roared to the forefront in the early 1990s when a newly elected Gov. William Weld helped block service taxes.
“What I’m afraid of is that argument will be used later on to justify sales tax on other services,” said Hunt. Aside from the new application of the sales tax to certain computer services, consumers do not pay a tax for other services, such as haircuts, tax preparation and legal advice. He said, “It kind of opens the lid a little bit to this Pandora’s Box.”
Hunt said the tax would apply to a vast swath of businesses, as so many pay others to custom-build websites, “back office” systems, and off-the-shelf software that is then customized to meet the needs of a particular hospital or other facility. The new 6.25 percent tax could have particular impact on businesses with slim profit margins, such as supermarkets that increasingly use technology to track customer purchases, Hunt said. In a state that prides itself on a high-tech economy, Hunt worried that Massachusetts firms will lose out to others because of the new service tax.
“My understanding is that depending on the type of situation that you’re in, a lot of these contracts are quite competitive,” Hunt said. “So even 6.25 percent can make a difference.”