The Massachusetts Senate on Thursday was debating the repeal of a new sales tax on software and computer services one day after the House of Representatives overwhelmingly approved the measure.
Lawmakers face a $160 million gap for the fiscal year that began on July 1, should the measure pass. "There will not be another tax coming through this body, in this session," Senate President Therese Murray, D-Plymouth, told reporters.
The state legislature in June passed a 6.25% levy on 10 categories of professional services related to computer systems and software. It was part of a $500 million tax package that Gov. Deval Patrick had supported.
Patrick, however, relented amid objections from taxpayer groups, the tech industry and such institutions as Harvard University and Massachusetts Institute of Technology.
"In retrospect, nobody thinks it's the right solution," Patrick said.
Other critics have calledthe legislation too vague. "It's almost impossible to collect," said Murray.
The Massachusetts Taxpayers Foundation designated the new tax the nation's most burdensome, saying only the Bay State singles out computer and software services. The foundation said the tax "strikes at the heart of the innovation economy that is central to the state's economic future."
On Wednesday, the House voted Wednesday 156-1 for repeal.
The lone dissenter, Rep. Angelo Scaccia, D-Hyde Park, objected to killing the technology tax while keeping tax hikes on gasoline and cigarette purchases, both of which he said would hurt poorer people. Scaccia also said repeal would leave insufficient money for transportation and other infrastructure improvements.
Standard & Poor's and Fitch Ratings rate Massachusetts' general obligation bonds AA-plus, while Moody's Investors Service assigns an Aa1 rating.
