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September 11, 2013

Governor changes tune, backs tech tax repeal

BOSTON — Gov. Deval Patrick said Tuesday he no longer supports a controversial sales tax on software design services, calling it a “serious blot” on the state’s reputation that should be repealed and replaced with another source of new revenue to support transportation investments.

The decision by the governor to seek a repeal and replacement of the computer services sales tax comes amid a fierce and organized push from the business community and some lawmakers to get the Legislature to reconsider the tax. In the face of opposition, lawmakers earlier this summer made the new tax a cornerstone of their $500 million tax package aimed at financing transportation and infrastructure spending and budget initiatives.

As the state struggles to add jobs and with unemployment rising, Patrick last week hosted a summit in his office with legislative and tech sector leaders to discuss concerns over the new tax’s impact on the business climate, and some business leaders left the meeting saying there was no commitment from those in the room to revisit the tax.

After an event Tuesday at Worcester Technical High School, Patrick told reporters he would be working with the Legislature and business leaders to identify a new source of revenue to replace the $161 million counted on in the budget from the new sales tax.

“We had a really good meeting last week and I think that that meeting was useful for some of the folks that were thinking about whether the solution was a narrower interpretation. And I think that the consensus in the room probably was that replacing with something was the better way to go. And I think the hard part now is to figure out what to replace it with,” Patrick said, according to a transcript of his remarks provided by his office.

State Senate Minority Leader Bruce Tarr and House Minority Leader Brad Jones said replacing the revenue was “unnecessary,” but suggested it could be found through savings-minded government reforms, future gaming revenues, the legalization of online gaming or other mechanisms that don’t require raising taxes.

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