EagleTribune.com, North Andover, MA

September 27, 2013

Mass. Senate repeals tech tax

By Colleen Quinn
State House News Service

---- — BOSTON - While repealing a tax on computer and software design services, Senate leaders yesterday had to beat back attempts by some lawmakers to both raise the gas tax and eliminate the 3-cent gas tax increase that was part of the same transportation financing package that included the tech-tax.

The three Republicans in the Senate who tried to add the gas tax increase to the list of taxes on track for repeal were also unsuccessful in their attempts to unchain the gas tax from future increases tied to inflation.

Sen. Cynthia Creem, in her attempt to raise the gas tax further, argued that with the tech tax gone there will not be enough money to invest in transportation. Creem wanted to raise the current gas tax from 24 cents to 29 cents.

The tech tax was counted on to raise $160 million and was part of the $500 million tax package approved this summer, which included a 3-cent per gallon increase in the gas tax and $1 tax increase on tobacco products. Future gas tax increases are tied to inflation. The repeal bill now sits on Gov. Deval Patrick’s desk awaiting his signature.

Senate Ways and Means Chairman Stephen Brewer said the state will bet on larger than expected revenues to plug the budget hole left by retroactively repealing the new sales tax on computer services, which had been counted on for $161 million in the fiscal 2014 budget.

The bill to repeal the tax (H 3662) passed unanimously in the Senate, 38 to 0.

Like her House counterparts, Senate President Therese Murray said legislative leaders made a promise to revisit the tech-tax to see if the impact was broader than anticipated. Business leaders decried the sales tax as an innovation-killer for the state.

“Today, we kept that promise,” Murray said in a statement after the vote. “Through ongoing conversations with industry experts, it became clear that this sales tax was having an unanticipated negative effect on our technology industry and I am proud of the Senate for taking action.”

Minority Leader Bruce Tarr (R-Gloucester), Hedlund and Sen. Richard Ross (R-Wrentham) filed amendments to eliminate the 3-cent gas tax increase and the mechanism in the transportation funding package that automatically ties future gas increases to inflation.

“At what point do we stop digging into the wallets of taxpayers?” Hedlund asked.