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Editorial: Mass. sales-tax rise

01:00 AM EDT on Wednesday, May 27, 2009

Recession-strapped Bay Staters were not happy to hear about the apparently veto-proof increase in the Massachusetts sales tax voted in the legislature, to 6.25 percent from 5 percent. Yes, the money will maintain some programs that Bay Staters seem to want continued. But the legislators took a dive on grappling with the costs of an out-of-control public-pension system and fatally flawed transportation administration –– both pressed by Governor Patrick. Dealing with those spiraling long-term expenses would have given lawmakers a lot more credibility in boosting a broad-based tax –– especially considering the public-pension abuses reported by The Boston Globe in recent months.

The sales tax will obviously affect sales of Massachusetts stores near the border with New Hampshire, but the impact elsewhere has probably been exaggerated. Few people are likely to spend money on gasoline to drive substantial distances to save a few dollars at a store. Further, the sales tax does not cover groceries, most clothing or prescription drugs.

But with the increase, only Rhode Island of adjacent states would have a higher sales-tax rate — 7 percent — though that levy exempts groceries, all clothing, prescription drugs and some other things. And Massachusetts legislators rightly voted to lift the sales-tax exemption on alcoholic beverages. This exemption seems passing strange, especially in a recession, unless you assume that people must buy more booze to medicate their economic anxiety.

Supporters quoted by The Boston Globe assert that the state would remain in the bottom third of states in sales-tax burdens because of its circumscribed nature. That’s plausible since many states that tout their low or nonexistent income taxes rely heavily on the generally regressive sales tax instead. Massachusetts lawmakers also so far have wisely voted to keep the income tax at 5.3 percent, rejecting lifting it to 5.95 percent. High state income taxes have a proven ability to scare away entrepreneurs and others who create jobs.

Meanwhile, legislators continue to oppose a tax increase that could do real good –– a higher state gasoline tax. Such a rise could be used to help better fund mass transit and in so doing reduce fossil-fuel use. And user fees (which include tolls) seem the fairest kind.

In any event, legislators’ failure to grapple seriously with at least two structural sources of high state costs before passing a big tax increase is depressing. Perhaps public outrage will push the solons in that direction before adjournment, though it is getting late.

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