Another year, another sales tax holiday this weekend, which always makes me ask: When will the state give us a real break and roll back the sales tax to 5 percent?
Beacon Hill raised our tax on goods to 6.25 percent in 2009, as Massachusetts and the world buckled under the Great Recession. The new rate, which amounts to a 25 percent increase, brings in about $1 billion in additional revenue.
I thought the hike would be temporary — when the economy improved, we would go back to 5 percent. Wishful thinking, apparently, but other states have lowered taxes after bumping them up during bad times. Last year, Governor Deval Patrick tried to tinker with the formula, proposing to decrease the sales tax to 4.5 percent, while raising the income tax and doubling personal exemptions. What happened: crickets.
What would a new governor do? I posed the question to eight candidates vying for Patrick’s job. Four of them — Charlie Baker, Jeff McCormick, Mark Fisher, and Scott Lively — said they would consider lowering the tax.
“Sales tax, which can be regressive in nature, should again be a focus,” said McCormick, a Boston venture capitalist who is running as an independent. “People are struggling, and it’s a very real tax.”
McCormick, who also favors bringing down the state income tax to 5 percent, said he would fill the billion-dollar hole by making government more efficient, such as through savings on energy and health care costs.
Fisher, the GOP challenger to Baker, was also enthusiastic about chopping taxes, as any good Republican would be. The Shrewsbury businessman is not worried about a shortfall, explaining the measure would pay for itself.
“Cutting taxes would stimulate the economy by putting money back in people’s pockets,” Fisher said. Besides, the Tea Party candidate thinks the state has plenty of revenue to play with. “If Governor Patrick can find $11 million to renovate his office, we don’t need this increase.”
Baker, being the moderate that he is, said through a spokesman that he would consider rolling back the sales tax if Congress passes a law that would allow states to collect taxes on Internet purchases. Lawmakers in D.C. are expected to revisit that issue later this year. It could mean an additional $400 million in annual tax revenue for Massachusetts.
“Charlie would use that money to reduce the sales tax as close to 5 percent as possible,” said campaign spokesman Tim Buckley.
Rather than adjust the sales tax, independent candidate Evan Falchuk is pushing for a tax overhaul. Meanwhile, Democrats — those bleeding-heart tax-and-spenders — argue the state needs the extra money to maintain critical services and make investments in areas such as education and transportation.
“With the economy slowly improving, we need to seize this moment to invest in areas that will make Massachusetts stronger and create opportunities for every individual and family trying to build better lives,” Attorney General Martha Coakley said in yet another generic campaign statement.
State Treasurer Steve Grossman, according to his camp, wants to keep the current rate so the state can fund universal pre-K education and freeze fees and tuition at public colleges, among other priorities. He also wants to make the tax code more progressive for moderate- and low-income families.
Don Berwick, the health care reformer, offered the blandest position, saying through a spokesman that he would need to “look carefully” at a proposal and would want to ensure the “most disadvantaged among us receive support they need.” I was hoping for something more exciting from someone who has been called the Mick Jagger of medicine.
The reality is we’re doing better. The state collected over $23 billion in tax revenue last fiscal year — 5.6 percent more than during the prior year and $169 million above projections. The more we give, the more Beacon Hill will find a way to spend.
Instead of a tax holiday, give us something we can enjoy all year long.