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August 22, 2013

State lawmakers may reconsider tech tax

BOSTON — Facing a still-growing chorus of consternation from the business community, a member of the Democratic Senate leadership said that chamber could revisit the new tax on computer services, though he said the state would need to find new revenues to replace those lost.

“We need to look at it a lot more. Certainly a repeal is an option,” said Senate President Pro Tem Richard Moore, an Uxbridge Democrat. But if the tax is repealed or “put on the shelf,” then lawmakers will need to “figure out where we’re going to make up some of this certain amount of revenue,” Moore said.

In the $500 million tax package that went into effect July 31, lawmakers steered existing revenue streams to transportation and replenished the state’s general fund with tobacco taxes and a new application of the 6.25 percent sales tax on computer software design and network services. A 3-cent gas tax set to rise with inflation was also part of the package that passed both the House and Senate overwhelmingly despite a veto from Gov. Deval Patrick, who doubted it could be counted on to generate $800 million in new transportation money by 2018.

Republicans in the House and Senate, including state Senate Minority Leader Bruce Tarr, objected to the whole package and its individual constituents, arguing that transportation needs more money but the state could afford a funding boost without new taxes by initiating reforms and limiting spending growth in other areas.

Since the new tech tax went into effect, the Department of Revenue has issued guidance to programmers and businesses concerned about how it will apply to them, and efforts to repeal have gained steam among some lawmakers and members of the public seeking to put a repeal question to voters in 2014.

“It certainly, probably needed more vetting than it got. It was out there for six months; the governor proposed it; the Ways and Means committees, I think tried to narrow the definition, but it’s not an easy area of activity to clearly define, because there’s a lot of gray area and a lot of overlap,” said Moore, who voted for the overall tax package, along with all of the Senate Democrats and one Senate Republican. Moore said, “I think it might have been too complex a plan to try to put through as part of that package.”

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