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April 2, 2013

Beacon Hill leaders call for gas, cigarette tax hikes

BOSTON — The gas tax would increase by three cents per gallon and the per-pack cigarette tax would jump by a $1 under a revenue package to be proposed Tuesday by House and Senate leaders to address long-term transportation financing.

House Speaker Robert DeLeo and Senate President Therese Murray plan to outline a proposal that would generate just over $500 million in annualized new revenues to support transportation, about a quarter of the new funding sought by Gov. Deval Patrick for infrastructure and education and half of what Patrick proposed for transportation.

According to a summary of proposal obtained by the News Service, House and Senate Democratic leaders will propose to generate $165 million in new revenue from new taxes on cigars, cigarettes and smokeless tobacco, including a $1-per-pack hike in the cigarette excise tax.

An estimated $110 million would come from a 3-cent increase in the state's 21-cent gas tax starting in 2015, and the gas tax would be tied to inflation.

The proposal captures $161 million from a tax code change to apply the state's 6.25 percent sales tax to computer system design services, and $83 million from changes to the utility classification and sales sourcing for tax reporting.

The plan, according to the documents, would provide “forward funding” for the regional transit authorities in 2014 and would allow the Department of Transportation to move all employees onto the operating budget by 2016 to stop paying for personnel with borrowed funds.

According to the summary documents, legislative leaders estimate the average driver will pay $12 to $30 more a year in gas taxes.

They believe gas consumption has declined and will continue to decline over the next five years, making it likely that overreliance on the gas tax would reopen the funding gap at the state's transportation agencies.

“A small increase to the gas tax combined with indexing for inflation is sensible and reasonable," the summary states.

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