Business Owners Unfazed Over Failed Bid To Cut Sales Tax
Massachusetts Taxpayer's Foundation Executive Director Michael Widmer: "I never thought the governor's propopsal was attractive to the business community."
Gov. Deval Patrick proposed sweeping tax reform in his annual State of the State address in January that contained, among other provisions, a 1.75-percent reduction in the sales tax.
State lawmakers rejected the proposal, which would drop the tax rate from 6.25 percent to 4.5 percent, along with plans to raise the income tax and eliminate certain deductions and exemptions for businesses, in their proposed $33.8 billion fiscal 2014 budget.
But rather than be disappointed, area business owners who sell products in the Central Massachusetts region said they're unfazed that Patrick's plan failed.
Michael Widmer, executive director of the Massachusetts Taxpayers Foundation, said it's simple: Some businesses would have lost more revenue due to the tax increases Patrick proposed in January than they would have gained from a simultaneous sales tax cut. And, sales tax isn't the most pressing taxation issue for commonwealth businesses, because many items, like groceries and clothing, are exempt.
"I never thought he governor's proposal was attractive to the business community," Widmer said.
Sweeping Proposal A Hard Sell?
What's more, according to Widmer, is that the breadth of Patrick's tax reform made it a difficult prospect from the start. He said it contained too many major changes to be viable for the coming fiscal year. "This was an enormous, sweeping proposal and always faced a very steep uphill battle," he said.
Business owners who weighed in on the lack of a sales tax cut didn't seem to put much stock in it either.
Mark Chapdelaine, co-owner of Chapdelaine Buick GMC in Lunenburg, said his business competes with neighboring New Hampshire on automotive parts and heavy equipment (cars are taxed based on the state they're registered in, so New Hampshire doesn't have an advantage there) and a sales tax decrease would probably keep more of those customers inside the Massachusetts border.
But the change only would have been worth it "as long as there are no strings attached," with the state trying to make up for a sales tax cut in other ways, Chapdelaine said.
John Creedon, owner of Creedon & Co., a Worcester catering company, said he'd love to see taxes lowered. As a caterer, he pays sales tax regularly to the state, plus meals tax to the city, on all his sales. But any proposal to lower taxes is one he takes with a grain of salt.
"You know that if they're going to lower (taxes), they're going to raise something else in this economy," Creedon said.
Like Widmer, Creedon believes Patrick's tax reform proposal was a longshot. Perhaps he was just trying to "start the conversation" on changing the tax code, Creedon said. But any plan that raises any type of tax right now is not a good idea, he said.
Support For Fuel Tax Hike
However, the Legislature has proposed gradually raising the fuel tax three cents per gallon, starting in fiscal 2014, which begins July 1. If it passes, it will be the first increase in more than 20 years. Widmer, of the Massachusetts Taxpayers Foundation, noted that the business community has shown "strong unity" in backing this increase as a way to raise new revenue to support transportation infrastructure spending, since infrastructure gives businesses a competitive advantage.
Business owners may have supported a "vanilla" increase in the income tax, had Patrick floated a more conservative plan, Widmer said, as they understand that the state needs adequate funding to support education and other services.
Bill Wiita, manager of The Factory Coop, a Gardner furniture store, understands that perspective. Being close to the New Hampshire border, Wiita said doing away with the Massachusetts sales tax would be a boon for his industry. But, he doesn't think it would serve the greater good.
"Sure we'd love to see it lower," Wiita said. "But I think there's got to be something there."
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