Posted on 05/07/2008 10:04:33 AM PDT by Disturbin
BOSTON —— The Massachusetts Senate voted overwhelmingly Tuesday night to raise the cigarette tax by $1 a pack and close hundreds of millions of dollars in so-called corporate tax loopholes.
The House passed a similar tax package last month. Gov. Deval Patrick generally supports an increase in the cigarette tax, but the $1 boost will be tied up in negotiations over corporate tax rates before it reaches his desk.
The Senate tax package, which passed 31 to 6, would raise nearly $472 million in revenue next year. The House passed a tax package last month that would bring in $80 million less than the Senate.
The differences likely will have to be worked out by a conference committee before a bill can be sent to the governor.
Massachusetts smokers already pay a $1.51 excise tax on a pack of cigarettes. The average price of a pack of cigarettes is $5.41, including the state tax, according to Tobacco Free Mass. The cigarette tax was last raised in 2002, when the Legislature nearly doubled it.
Unlike the House, where a number of legislators said smokers were being unfairly targeted, there was little debate on the cigarette tax in the Senate.
"The Senate's proposal is a reasonable representation of everyone's interests that provides predictability and fairness," Senate President Therese Murray, D-Plymouth, said in a statement after the vote. "It's a bill that is sensitive to the needs of the business community to help them maintain their competitive edge while also generating appropriate and much-needed revenue for state services."
Republicans charged that the Senate's corporate tax changes, a mix of rate cuts and loophole closings that would raise $297 million, would cost jobs in Massachusetts.
"Companies are finding it more and more difficult to expand and relocate to Massachusetts, and they are doing it in other states," said Sen. Richard Tisei, R-Wakefield, the chamber's Republican leader. "How will it lead to job creation in Massachusetts?"
Sen. Marc R. Pacheco, D-Taunton, who voted for the tax package with the rest of the SouthCoast delegation, rejected Republican arguments that the tax hikes were not needed. He blamed former Gov. Mitt Romney's administration for leaving the Patrick administration with a "structural deficit," on top of unmet needs in transportation, education and human services.
The Legislature is grappling with ways to close a $1.3 billion gap between projected revenue and the cost to maintain current services.
Sen. Pacheco said this week's news that April tax collections were $400 million higher than the same month last year did not mean the state was out of its fiscal hole. Patrick administration officials said the money appeared to be a temporary bump that did not fully reflect the economic downturn for the 2009 fiscal year to begin July 1.
"One month does not tell what the economic situation is going to be in the tax revenue for the year," Sen. Pacheco said. "You can't just add up the revenue piece. You have to add up the expense side and what we are not paying for."
The Senate and House bills both adopt two major loophole closings that the governor has sought.
One, called "combined reporting," would bar multi-state companies from shifting profits to headquarters in other states to avoid paying Massachusetts taxes. Another, called "check the box," would prevent companies from claiming a different tax status on federal and state tax returns.
Massachusetts would become the last state in the nation to adopt "check the box" and the 23rd to have combined reporting.
The Senate would also cut the corporate tax rate from 9.5 percent to 8 percent over three years, beginning in 2010. The House bill would cut the rate to 7.5 percent over three years, beginning next year.
The Senate defeated a proposal for a 5 percent tax on alcoholic beverages to raise $87 million for drug abuse treatment.
Senators filed amendments for other tax increases, including local option meals taxes, an end to the tax exemption on utility poles, and the expansion of the state's hotel room occupancy tax to vacation home and condominium rentals.
In the end, those amendments were dropped when it became clear they would not pass. Instead, the Senate approved a study commission on municipal revenue options, with a report due Dec. 1.
The politicians in Mass have never met a tax they didn't love.
Wait until they go after junk food.
$5.41 average?! That means a pack of Marlboros must be like $7.25 after the tax hike!
And I was glad that I quit smoking just before they got near $4 here in NC.
Taxachusetts.
I would also mention these political rats pretend to hate tobacco when in reality they love to make money off a habit that does tremendous damage to addicted individuals.
It must not just be the politicians, because the massholes keep electing them. They don't just get elected by accident.
People live there because? I just can't think of a good reason.
In regards to the corporate tax laws, this can only be good news for the other 49 states. We aren't very happy that Mass. is trying to get their cigarette smokers to leave as well.
And drive shoppers to the nearby states. May the Pols in Massachuesetts get another Massachussets miricle and 50% less revenue.
Where’s John Hancock when you need him?
>>The average price of a pack of cigarettes is $5.41
Soon to be $64 a carton plus sales tax!? Smells like a golden business opportunity for tobacco runners.
carolyn
Doesn't occur to these yahoos that maybe they're spending $1.3 billion too much instead of being short $1.3 billion, does it?
}:-)4
Exactly — smokers who live anywhere near the NH border buy their smokes up there. Store owners know it and there is little they can do about it.
A tax on the poor that liberals support.
LOL, we are already losing population. Supposedly we will lose at least one House seat after the 2010 census.
Ok, here’s a question, and believe me, I am no economist...
but these tobacco companies pay high taxes, right? And a buck a pack will decrease the amount of cigs bought (I’m assuming, it would for me!), therefore decreasing income and profit for the tobacco companies. That would decrease the amount of taxes paid by the corporation, right?
Maybe I’m confused.
Oughta make the cigarette smugglers happy.
People live there because? I just can't think of a good reason.
Well, sorting out the lesser of two evils in Massachusetts is not much different than in national politics. Maybe you see a big difference between McCain and Obama. I sure don't. But, you and I are going to vote for one of them. Can you think of a good reaon to live here in the US?
I hope they don’t prematurely spend the anticipated revenues, because they’ll never materialize.
When I was in college, I paid $3.19.....a carton.
I was buying beer in a local 7-11 and the store guy mentioned that Natural Light had gone up 20 cents to $3.99. I countered with “In college I paid $3.19 a carton for cigarettes and $3.29 a 6 pack for Natural Light.” The college kid buying a pack of Parliments almost chocked to death because he just paid $4.00 for a pack of cigs
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