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With tax collections pouring in but Democrats still on the hunt for new revenue, the possibility of repealing tax breaks for specialized industries like aviation or the chance to apply new taxes to unhealthy, sugary drinks dangles like low-hanging fruit before many lawmakers.
But for every tax break or untaxed good that looks ripe for the taking, there is a constituency on the other end worried about the impact a change might have on jobs or the livelihoods of local business owners.
The Joint Committee on Revenue saw that tug-of-war play out Tuesday as members of the committee listened to testimony about legislation proposing to change the way the state applies its 6.25% sales tax.
It was the committee's first hearing on tax bills since House Chairman Mark Cusack told his colleagues at the opening of House budget deliberations in late April that his committee planned to get "rocking and rolling" soon, starting the process of holding hearings on tax bills in anticipation of a revenue debate later this year.
"Every year our state loses millions of dollars in revenue to special tax breaks, and while some of these are useful to achieving our economic or policy goals, there is no rationale for reducing or exempting taxes on specific luxury goods," said Rep. Tami Gouveia, an Acton Democrat.
Gouveia has filed legislation to repeal the sales tax exemption for aircraft, which she said could net the state an additional $20 million a year. And Sen. Adam Hinds, the co-chair of the Revenue Committee who is also leading a Senate examination of the tax code, said the exemption is often held up to him as an example of the "incoherence" of the state's tax policies.
But Sean Collins, regional manager of the Aircraft Owners and Pilots Association, said the aviation industry is intertwined into everything from medical transports to wildlife management, and the tax exemption helps support thousands of jobs, mainly in aircraft maintenance.
If the tax exemption was repealed, "we would see a gradual loss of jobs," Collins warned, telling the panel that pilots can fly to any number of states within 30 minutes where they won't have to pay a tax on parts or labor.
Facing the opposite problem, advocates for the trucking industry showed up to testify in support of bills (H 2517/S 1759) filed by Senate Ways and Means Chairman Michael Rodrigues and House Minority Leader Brad Jones that would stop taxing "rolling stock," or the trucks used to transport goods across state lines.
Steve Normandin, president of the Truckers Association of Massachusetts, said 93% of all goods spend time on a truck, and that number is only getting higher with the rise of online retail. The exemption for rolling stock, however, was repealed in 1996, and the Department of Revenue currently collects between $9 million and $13 million a year, though Normandin admitted the tax is "not collected consistently or widely."
Ed Rodricks, also with the Truckers Association, said by restoring the exemption the Legislature would put Massachusetts on more competitive footing and in line with 37 others states. The money saved, he said, would allow trucking companies to invest in newer vehicles that are more fuel efficient and expel fewer carbon emissions.
The opportunity to reduce carbon emissions wasn't the only public health benefit being touted as a possibility through changes to the tax code.
Health advocates, including representatives from the Joslin Diabetes Center and the American Heart Association, were back at the State House making their case for taxing sodas and other sugary drinks.
The latest proposal, filed by Rep. Kay Khan, would apply a three-tiered tax structure to sugary drinks, with beverages with the most sugar, such as Coca-Cola, facing a 24-cent per can tax.
"If you could do one thing to dramatically improve the health of the people of Massachusetts, it would be to enact a sugary drink tax," said David Martin, CEO of the Massachusetts Health Council.
Several doctors linked high-sugar sodas and other drinks to increases in childhood obesity and diabetes, and Allyson Perron, of the American Heart Association, said the money raised through the tax could be put into programs that would make water and other healthy alternatives more accessible at schools.
The idea of a tax on soda, which former Gov. Deval Patrick pushed unsuccessfully almost every year he was in office, was once again opposed by convenience store operators and beverage manufacturers.
Jon Shaer, the executive director of the New England Convenience Store and Energy Marketers Association, said a provision in the bill that would put the onus for collecting the tax on retailers if distributors fail to pay would be unfair because there is no way for a store owner to verify if the tax had been paid.
Bree Dietly, a partner at Northbridge Group and representative of the American Beverage Association, also said it would push sales over the border and lead to a $700 million loss in retail sales around the state.
Citing the example of Philadelphia and that city's soda tax, Dietly said, "People just moved somewhere else to do their shopping. That doesn't convey any health benefits."
Rep. Randy Hunt, a Sandwich Republican and accountant, peppered proponents with similar questions about how the tax would be enforced, and suggested the proposal needed more work.
Hunt also asked Shaer whether the tax would lead store owners to stock their shelves with more healthy alternatives.
"Possibly," Shaer said. "At the end of the day, retailers are going to sell what sells."
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