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Massachusetts Liberal

Observations on politics, the media and life in Massachusetts and beyond from the left side of the road.

Monday, April 27, 2009

A taxing situation

The first piece of the state's fiscal bailout appears to be taking shape in the House, where Speaker Robert DeLeo appears ready to throw his support behind a 1.25 percent increase in the sales tax.

Aside from being a messy number when you try to compute the tax in your head, the 25 percent increase in the levy appears to be a fair solution to a vexing problem. But the House is setting up some booby traps by earmarking portions of the new revenues for specific problems.

The plan calls for $275 million to go to transportation needs and $200 million for local aid, leaving about $425 million to deal with what is estimated to be a $1.2 billion budget hole.

It also doesn't come close to solving the transportation needs. Gov. Deval Patrick's 19-cent a gallon gas tax hike would bring in an estimated $500 million, enough to offset toll hikes and help deal with the MBTA's shortfall which, let us recall, is tied to a drop in sales tax receipts earmarked for the T.

Massachusetts Taxpayers Foundation president Michael Widmer suggests the revenues would not begin to make a dent on the teeth-rattling condition of our roads and bridges in serious need of repair thanks to the cash vacuum cleaner known as the Big Dig.

Nor would a $200 million restoration of a $424 million local aid cut forestall significant municipal cuts or efforts at property tax increases.

There seem to be two obvious directions lawmakers can go to fill in the remaining gap -- short of following through on the full laundry list of cuts. One item may very well be on the table for the fall -- slots or casino gambling. The climate is likely to be very different after the full impact of the fiscal 2010 budget hits home.

The other option can and should be more timely -- expanding the reach of the sales tax. No, not to clothes or food. But professional services. Telecommunications. And most importantly, gasoline.

I'll leave it to someone else to do the math, but a 1.25 percent add-on to a gallon of gas should be a lot less costly than a 19-cent tax. It would generate a lot more dollars to go to road and bridge repair.

And it would be a user fee -- a charge levied on motorists who use those highways and local streets. Don't drive as much, use the T (shudder) and you won't pay as much. It's a basic energy conservation measure, something that seemed important when gas topped $4 a gallon.

We will continue to hear laments that a higher sales tax would drive business to New Hampshire. Maybe, maybe not, except in communities that border the "tax-free" mecca of higher property taxes. It would still be a lower sales tax than Rhode Island or New York.

The folks who insist on getting something for nothing can continue to move to New Hampshire. And maybe we can charge them one-way exit tolls.

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Blogger Rob said...

I really like your idea on extending the reach of the sale tax. Makes a lot of sense.

April 27, 2009 9:58 AM  
Blogger John said...

need to check your math. including gasoline as a sales taxable item subjects the gas to the 6.25% total sales tax not just the 1.25% increase. not that it isn't worth considering.

May 01, 2009 1:02 AM  

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