Amid Ballot Effort, Sen. Spilka Plans To File Repeal Of Tech Tax

Senate Majority Whip Karen Spilka plans to file legislation repealing a software and computer system services tax that was included within the $500 million tax bill that passed both branches with the vote of the Ashland lawmaker and nearly every other Democrat earlier this year.

Concern has mounted around the tax, which is the target of a fledgling effort to repeal it on the 2014 ballot, as the Massachusetts Taxpayers Foundation and others worry that it could drain as much as $500 million from the Bay State’s high tech field — much more than the $161 million lawmakers say it was intended to generate.

“As legislators, our goal is to create and maintain a business climate that allows innovative companies to be created and grow here,” wrote Spilka, who was Senate chairwoman of the Committee on Economic Development and Emerging Technologies last session, in a press release Wednesday. “Digital technology is at the heart of our innovation economy and key to our future prosperity; we want technology companies, big and small, to thrive here. Since the ‘tech tax’ has become law, the reaction of the technology industry makes it clear that this new tax is detrimental to those goals. I am filing legislation today to repeal this tax.”

The effort to repeal the new law via petition and ballot measure is being headed up in part by the Massachusetts High Technology Council, which boasts participation in other successful tax-reduction efforts, such as the Proposition 2 ½ limits to property tax increases, which the council funded, according to a council spokesman.

“Over the course of three decades, the High Tech Council has resorted to the initiative petition process reluctantly – but with great determination – in pursuit of policies we believe are essential to creating or protecting a competitive environment for job and economic growth,” Council President Chris Anderson wrote to lawmakers Wednesday. “This month, we did so again.”

The High Tech Council also participated in the rollback of the income tax to 5 percent, a measure that voters passed but the Legislature halted.

“As you are well aware, Massachusetts is a clear leader in innovation and technology. We have the highest percentage of tech workers of any state, the largest number of tech clusters, and a highly educated workforce that is second to none. However, none of the states with which Massachusetts most often competes for high tech jobs has a tax like this,” Anderson wrote. “We have become more uncompetitive at a critical time when tech firms are increasingly expected to lead economic growth and hiring.”

Spilka and others in the House and Senate voted to override Gov. Deval Patrick’s veto of the $500 million tax bill. Patrick, who proposed similar and more expansive legislation around applying the sales tax to computer services, argued that the tax bill would not create enough revenue for long-term transportation funding.

Repealing the tech tax would eliminate a major source of new transportation funding.