New payroll tax different ‘than just raising taxes,’ Baker says

Governor Charlie Baker listened during a groundbreaking ceremony for the Green Line Extension on Prospect Street in Somerville earlier this week.Aram Boghosian for The Boston Globe

Governor Charlie Baker — who has campaigned on opposing new taxes or fees — said his decision last week to sign sweeping legislation that includes a new $800 million payroll tax does not renege on that promise.

The tax, which goes into effect in 2019, is designed to fund a newly created paid family and medical leave program, one of several pillars of the so-called grand bargain bill Baker signed Thursday that will also hike the hourly minimum wage to $15 and eliminate premium pay for Sunday and holiday work.

Baker said Friday he decided to sign the bill because he felt the “totality of the solution” was far better than seeing the three individual ballot questions the legislation diverted — slicing the sales tax to 5 percent, raising the minimum wage, and creating a paid leave program — go before voters.

But as for the new 0.63 percent tax used to cover the leave program? He said that aligns with his argument that a charge attached to a “new service” does not constitute a new fee.

“I said during the campaign . . . that a new fee to support a new program, especially one in this particular case that clearly had the support of the public, is a lot different than just raising taxes just to balance the budget,” he told reporters.

“I consider this to be quite similar to the way we run unemployment or the way we run workers’ [compensation], where people pay into a fund and that fund they pay into is typically shared between the employer and the employee, and there’s a benefit to the employee as a result of that,” Baker added. “I don’t consider it to be the same as just raising taxes to balance the budget.”