Mass. Senate Leaders Call Sales Tax Hike The 'More Fair' Option

Bay State consumers will be paying more, as the state Senate has gone along with the House in approving a 25-percent increase in the state sales tax.

Senators overwhelmingly approved raising the sales tax from 5 percent, the level it has been for over 30 years, to 6.25 percent. Senate budget analysts estimate the hike will bring in an additional $633 million dollars, far less than the House estimate of $900 million.

Earlier in the day, senators rejected amendments that would have raised the state income tax and the gasoline tax.

After the sales tax vote, Senate President Therese Murray said raising it was the fairest option.

"It exempts clothing. It exempts food, it exempts prescriptions, it exempts utilities," she said. "So I think this is the more fair way to go if we have to raise revenue, and unfortunately we have to raise revenue. If we have — and you saw the list of services that have been cut — that will now be, not restored, but at least we'll have some money to put back into those programs."

Among the programs that would see funding partially restored are "Turning 22" for Department of Mental Retardation clients, programs for mentally ill people and respite for parents of children with severe developmental disabilities.

The vote to raise the sales tax was 29-10, two votes more than the two-thirds needed to override a threatened gubernatorial veto. All five Republicans in the Senate voted against the hike, as did five Democrats — most of them represent border districts, including Methuen Sen. Steven Baddour.

"It's a tough day," Sen. Baddour said. "We had tough choices to make, and I think we took some serious reforms. We made a lot of cuts, and took some tax votes. I mean, I obviously voted against the sales tax because of the border that I represent. All my communities border New Hampshire, so it's a difficult issue in terms of my district."

Retailers along the New Hampshire border fear the increased sales tax will drive more shoppers to the Granite State, where there famously is no sales tax. And small businesses in the rest of the Bay State fear their customers may think twice before making a purchase.

Jon Hurst of the Retailers Association of Massachusetts says Main Street merchants will be hurt by this tax.

"The consumer is already so price conscious in this down economy," he said. "Yet, the legislature has to realize that they cannot make the consumer pay this tax. They can only incent them to shop elsewhere, and I am afraid that the consumer will will shop in droves on the Internet, or in New Hampshire."

In addition to raising the sales tax, the Senate also voted to expand the sales tax to alcohol purchased in grocery and package stores. That move is expected to bring in $80 million, with the money used to fund substance abuse programs. A provision to give local communities the ability to raise taxes on meals and hotel rooms was also approved.

The senate resumes its budget debate later Wednesday.