SalemNews.com, Salem, MA

Local News

July 6, 2013

Tax plan draws concern

A bill designed to raise $500 million in new taxes for the state includes a controversial tax on some computer transactions, a measure critics say could devastate businesses, but supporters insist is nothing to worry about.

As of yesterday, the bill had been passed by the Legislature and was sitting on Gov. Deval Patrick’s desk awaiting his signature. The bill hasn’t been signed because the governor thinks it fails to increase the gas tax enough (it boosts the tax by 3 cents, with the increase tied to inflation) to compensate for revenues likely to be lost when some Turnpike tolls are eliminated. It also increases taxes on tobacco products.

The most controversial part of the bill would extend the state’s 6.25 percent sales tax to a variety of technological services.

“Nobody knows what this bill will do,” said tax activist Barbara Anderson of Marblehead, who raised the alarm about this in her Salem News column earlier this year.

But Rep. John Keenan, D-Salem, who voted for the measure, said criticisms of the tax on computer transactions are unmerited.

“Almost 30 other states have a similar tax,” he noted. “It is not intended to be a tax on computer services.”

Importantly, Keenan said, the tax leaves the average consumer out of the mix. It doesn’t tax repairs on your home computer, for example, and it won’t be levied when you upgrade your PC with a second hard drive. Nor does it tax so-called “cloud services.”

Instead, he said, the tax will impact computer system design and is aimed more at businesses. “This is a tax on computer products,” said Keenan. “If someone is working on software for you and they upgrade it. ... If someone is creating a new product for you, yeah, you would pay a tax on that.” He expects the measure to earn the state about $100 million.

Text Only | Photo Reprints
Local News

AP Video
Couple Channel Grief Into Soldiers' Retreat WWI Aviation Still Alive at Aerodrome in NY Raw: Rescuers at Taiwan Explosion Scene Raw: Woman Who Faced Death Over Faith in N.H. Clinton Before 9-11: Could Have Killed Bin Laden Netanyahu Vows to Destroy Hamas Tunnels Obama Slams Republicans Over Lawsuit House Leaders Trade Blame for Inaction Malaysian PM: Stop Fighting in Ukraine Cantor Warns of Instability, Terror in Farewell Ravens' Ray Rice: 'I Made a Huge Mistake' Florida Panther Rebound Upsets Ranchers Small Plane Crash in San Diego Parking Lot Busy Franco's Not Afraid of Overexposure Fighting Blocks Access to Ukraine Crash Site Dangerous Bacteria Kills One in Florida Workers Dig for Survivors After India Landslide Texas Scientists Study Ebola Virus Smartphone Powered Paper Plane Debuts at Airshow Southern Accent Reduction Class Cancelled in TN
Comments Tracker