State leaders mum on additional sales tax relief
Photo | Courtesy of Commonwealth of Massachusetts
Massachusetts State House
State lawmakers agreed Monday to set Aug. 13 and 14 as the dates for this year's annual sales tax holiday, but legislative leaders wouldn't say whether any sort of reduction in or expanded break from the 6.25 percent sales tax will feature into their relief plans.
"I'm sure as we go forward, everything will be on the table and we'll look at that but for right now, we're just talking about the sales tax holiday that we agreed to set a few years back," Senate President Karen Spilka said.
The House and Senate adopted a joint resolution Monday scheduling the two-day break from the sales tax, which was established as an annual holiday under a 2018 law that also raises the minimum wage from $11 to $15 an hour over a five-year period, phases out time-and-a-half pay for workers on Sundays and holidays, and solidified the launch of a paid family and medical leave program backed by a payroll tax.
That law, dubbed the "grand bargain," was a deal struck to keep three initiatives from going to the ballot, including one backed by retailers that sought to roll the sales tax back to its former 5 percent rate.
Faced with a state budget crisis, lawmakers in 2009 raised the sales tax to 6.25 percent, after the Great Recession wreaked havoc on revenue collections.
This year, surging tax collections prompted Gov. Charlie Baker to file a nearly $700 million tax-relief plan that proposes changes to the estate tax and tax on short-term capital gains along with relief for parents and caregivers, seniors, renters and low-income earners.
Spilka and House Speaker Ronald Mariano have said they plan to pursue relief packages, with an eye toward vulnerable populations and those hard hit by COVID-19. With less than seven weeks of formal lawmaking sessions left for this year, they have not put forward concrete proposals but said they are looking at Baker's bill (H 4361) and ideas from lawmakers.
Spilka and Mariano have ruled out a gas-tax suspension despite high fuel prices, saying there's no way to guarantee that oil companies would pass savings on to consumers.
Mariano echoed Spilka Monday in saying "everything is on the table" in tax-cut talks.
"We haven't made a decision about anything," he said.
Asked if that included a gas tax holiday, Mariano said, "Probably not a gas tax holiday because it's something I never really believed in."
House and Senate Democrats, in passing their respective nearly $50 billion budgets for the fiscal year that starts July 1, turned down Republican amendments proposing gas tax suspensions and mirroring Baker's tax package. Senators also rejected a proposal from Minority Leader Bruce Tarr that would expand the sales-tax holiday to run for two weeks, from Aug. 8 to 21.
Tarr said on the Senate floor Monday that he hopes lawmakers will consider expanding the sales tax holiday this year, calling it "one of the best ways to be able to give tax relief to the citizens of the commonwealth of Massachusetts, who are watching these debates, and asking themselves -- repetitively -- if we have billions of dollars in surplus, and we are properly funding all of our accounts, then why is it that we cannot find the ability to reach consensus on offering substantial, responsible tax relief?"
Last year, with the state similarly on track for a major budget surplus, Gov. Charlie Baker proposed stretching the sales-tax holiday into a two-month break, an idea legislative Democrats rebuffed.
Asked Monday if he'd like to see changes to the sales tax, Baker talked about tax relief more broadly.
"I've said many times that the state is awash in revenues because the people in Massachusetts bounced back in an extraordinary way coming out of the pandemic," Baker said. "And given the rising price of practically everything, they have earned tax cuts from the commonwealth, and I hope that a package that includes tax cuts for people in Massachusetts gets to my desk by the end of this session so that we can sign it and say thank you to the people who made all that revenue possible."
In 2018, Baker said he supported reducing the sales tax, and campaigned on that idea during his unsuccessful run for governor in 2010.
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