I had done a posting on the financial potential of a one percent hike in the sales tax a couple of days back, and I guess the numbers are not that hard to figure, since the House is now talking about a two percent hike in the sales tax, and a broadening of the items covered by that tax. Talk also includes adding gasoline to the list of covered products, and omitting the Governor’s proposed gas tax increase. It is difficult to put numbers out for discussion since those numbers are dependent on what additional items or services would be added, but a real big expansion of the “sales tax eligible” goods and services would likely produce a very big bump in revenue. Without an expansion a two percent hike would be worth about $1.3 billion. If gasoline alone is added the figure I have seen is an additional $400 million. So the Legislature can, with one vote to raise the sales tax by 2 points and add gasoline, raise about $1.7 billion and not have to deal with a separate vote on the Governor’s gas tax proposal, or any of his other tax proposals.
If the $400 million dollar number is correct this would be the equivalent of a 15 cent gas tax increase. (At $27 million per penny). But there are wider ramifications beyond static revenue raising at stake here. Current Massachusetts tax policy has created a dismal business enviroment on the New Hampshire border, and a two percent sales tax increase will be a pretty big disincentive for business to locate on the Massachusetts side of the border. Methuen has benefitted greatly from the presence of “The Loop”, which pays significant property tax to our City. The Loop, and the commercial corridor it has helped to create, could take a substantial hit from such a sales tax increase. As the legislature contemplates revenue it should be mindful of the adverse consequences to job creation and local tax revenues that a sales tax increase of that magnitude could engender. It would excacerbate an already terrible climate for business on the Massachusetts side of the border.
Finally on this topic the Governor must exercise some leadership. If he does not support a sales tax increase then he ought to say so. I understand that he is looking at the 15 cent gas tax increase achieved through the sales tax expansion with some realization that it may be the most revenue he can get for transportation, but he needs to make the call. If the Legislature’s talk of a sales tax increase is not acceptable he ought to threaten a veto. If the transportation revenues are too much to resist then he ought to be negotiating and setting parameters for the Legislature on a bill.
Bill Manzi.com 
Your Honor,
I saw your ‘Fair and Balanced’ opinion of the Governor’s performance thus far. The Tribune piece was damaging. I saw you ended with the Democratic mantra calling for ‘hope’ that he will learn. Democrats always get another chance, no matter how poor they do.
The Governor has not been part of the dialog for a long time on any issue. No matter what he or the legislature does, raising taxes by any means will not go over well.
You are charging the Governor with the political version of ‘manning up’.
I close this entry out with a grin as I remind you of the poll that claims Mitt Rommney polled better than Deval Patrick. And, he wasn’t even here most of the time.
That has to hurt.
Jules
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Jules,
I caught your letter in today’s Trib. More card check bashing, eh? I think you somewhat misrepresent what I said to the Trib. I said that you cannot write him off yet, because there is still time for him to recover politically. With all of the difficult decisions ahead it will be a bigger task to recover, but it is still possible.
Bill
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Your Honor,
I got the “hope and change” bit. It’s possible. I thought you did well in that piece.
Card check bashing? Obviously you did not read it because you would have noticed it was a description of a real life event. No logic, no partisanship BS. It really happened. You Tube videos were a collection of news reports. I saw one of them on….ready for this……Fox. Wasn’t a pretty picture.
Did you read Steve Falvey’s piece a few days earlier? If not I would be willing e-mail you a copy.
Jules.
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Your Honor,
If the sales tax goes up 20-40% what will happen to business in Methuen. They are right on the NH boarder. Can’t help.
Does Methuen share in any of this additional tax?
Jules
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A two percent hike in the sales tax would be terrible for business on our side of the border. As I point out some of our major taxpayers would be impacted badly, and that would not be a good thing. I have not heard whether any prospective increase in the sales tax would be dedicated to local aid.
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Your Honor,
According to the Herald, the present budget proposal sets aside 300 million dollars for the towns.
Jules
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