GloucesterTimes.com, Gloucester, MA

May 21, 2013

City urges changes in state sales tax rules

By James Niedzinski
Staff Writer

---- — Gloucester officials are urging local state legislators to use revenue from a potential online sales tax to reduce the state sales tax, and the city is prompting other Cape Ann communities to do the same.

A letter, written by City Clerk Linda Lowe last month on behalf of the City Council, which approved a resolution, asks State Sen. Bruce Tarr, R-Gloucester, and state Rep. Ann Margaret Ferrante, D-Gloucester, to advise their legislative colleagues to support the lowering of the sales tax if an Internet sales tax gains state approval.

And Ward 5 City Councilor Greg Verga — who is running for an at-large seat — is urging officials in neighboring communities to adopt the resolution as well.

Verga has also reached out to state Rep. Bradford Hill, the Ipswich Republican whose district includes Manchester, as well as to city and officials in Beverly, Salem, Rockport and Manchester.

He said the idea would hopefully snowball and gain support through local legislators and officials from municipalities across the state.

The proposal to scale back the state sales tax comes as legislators are considering whether Massachusetts will join a growing number of states in collecting online sales tax dollars.

Earlier this month, the U.S. Senate, on a vote of 69-27, approved a bill giving states the choice of taxing online sales, though some conservatives feel a similar bill will be a tougher sell in the House.

Under current law, states can only require retailers to collect sales tax if the store has a physical presence in the state.

In 2012, Internet sales in the country rose by nearly 16 percent, with sales totaling $226 billion, according to government estimates. In all, states lost a total of $23 billion last year due to out-of-state sales — about half of which were via Internet sales, according to the National Conference of State Legislatures, which lobbied for the national bill.

Last year, the Massachusetts Main Streets Fairness Coalition estimated that Massachusetts loses out on some $335 million through online and catalogue sales.

Tarr, who helped Verga craft the language for the resolution, said the proposal to lower the primary sales tax if the state opts for an Internet sales tax represents a strong form of partnership.

”If we do see an online sales tax — a broad-based one — this idea has a lot of merit,” Tarr said.

”The increased sales tax was supposed to be temporary,” said Verga, referring to the Legislature’s 25-percent boost of the state sales tax from 5 percent to its current 6.25 percent in 2010. “Temporary has a habit of becoming permanent.”

Both Tarr and Verga — a Democrat and the son of 14-year former state representative Anthony Verga — said that a lower regular state sales tax could make Massachusetts more competitive with neighboring states.

The Ward 5 city councilor contacted Erin Battistelli, the chair of Rockport’s Board of Selectmen last week. Battistelli said Rockport would be set to discuss the issue at their upcoming meeting on May 28.

Manchester has also begun the conversation, with the Board of Selectmen set to discuss the issue at its meeting last night. However, Susan Thorne, who chairs the Board of Selectmen, said Monday afternoon she was unsure if it would come up, citing the changing faces on the board in the town elections going on today.

Neither Hill nor Ferrante could be reached for comment Monday.

The resolution is also scheduled to be discussed by the Cape Ann Chamber of Commerce at their Government Affairs Council meeting next month. The Chamber’s government council would then makes a recommendation to the Executive Board before releasing a statement on the proposal.

Material from the Associated Press was used in this report.

James Niedzinski can be reached at 978-283-7000, x 3455 or at jniedzinski@gloucestertimes.com.