Massachusetts House members last week approved increasing the state’s sales tax to 6.25% to generate $900 million of additional revenue each year, with $275 million of the new funds going to support transportation infrastructure.
The sales tax hike is part of the lower chamber’s budget plan and would help close a $3.6 billion deficit for fiscal 2010, which begins July 1, with the aid of $1.2 billion of spending cuts.
“The proposal to solve this crisis must include a combination of cuts, one-time revenues, federal stimulus money, and as a last resort, measured revenue increases to solve the deficit,” according to a House document.
The measure passed in a 108-to-51 vote, making it veto-proof from Gov. Deval Patrick’s pledge that he would not sign off on boosting the sales tax by 1.25% to 6.25%.
In contrast, the governor proposes eliminating sales tax exemptions for alcoholic beverages, soda, and candy, a move that would garner $121.5 million for fiscal 2010. In addition, Patrick wants to increase the state’s gas tax by 19 cents to 42.5 cents per gallon to raise needed revenue for transportation infrastructure.
“I believe that in the current economic and political climate, the best approach is through targeted tax increases dedicated to specific needs,” Patrick said in a video address on YouTube in response to the sales tax vote.
The governor recommended a gas tax increase to pay for better roads and bridges, local option taxes to take the pressure off the property tax, and removing the sales tax exemption for candy, soda and alcohol to help pay for public health programs.