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Business

Patrick signs ‘tech tax’ repeal

Governor Deval Patrick signed a bill repealing the controversial tech tax.

Eric Haynes/Governor's Office

Governor Deval Patrick signed a bill repealing the controversial tech tax.

As expected, Governor Deval Patrick on Friday signed the repeal of the new tax on software services, ending a two-month-long controversy that had inflamed the state’s business and technology sectors.

The governor’s office announced the signing of the bill on Twitter, which had been a key platform for members of the state’s tech community to protest the tax.

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Earlier this week, the Massachusetts Senate and House each voted overwhelmingly to abolish the levy, which imposed the state’s 6.25 percent sales tax on a range of computer and software services. Tech executives complained the tax was so poorly written that it was confusing to interpret and could add significant new costs on purchasing software and related products.

In striking down the new tax, Patrick killed a major part of a financing package for transportation projects that alone would have raised an estimated $160 million annually. The governor has called on Beacon Hill to find a replacement for the revenue but no alternative funding was recommended during the repeal.

The transportation funding package that was passed in July raised taxes on gas and cigarettes, and extended the sales tax for the first time to computer-related services. The business community did not begin speaking out on the software tax until it went into effect July 31. After that, some of the state’s largest corporations and smallest start-ups banded together to support a ballot initiative, organize protests, and even threaten legal action against the state.

But a key turning point in the tech tax controversy seemed to come from face-to-face meetings between Patrick and key lawmakers and members of the tech community. After those, Patrick came out against the tax, calling it a “serious blot” on the state’s reputation.

Members of the local tech community celebrated their victory via Twitter on Friday. “Huzzah! The new MA tech tax repeal officially signed,” said tech entrepreneur Daniel Sullivan. “Warning shot for the local industry, let’s pay attention.”

Michael B. Farrell can be reached at michael.farrell@globe.com.
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