Tax package would add $1 to Cigarettes
Smokers would have to pay an extra $1 per pack of Cigarettes under a tax package headed for a vote in the House this week.
Smokers would have to pay an extra $1 per pack of Cigarettes under a tax package headed for a vote in the House this week. The legislative revenue committee is advancing a bill that would raise the cigarette tax and close some corporate tax loopholes as a way of helping the state through its budget problems. The plan, however, has strong opposition from local legislators and senators on the revenue committee. Even the House chairman of the committee said he has some problems with the bill, despite the fact that he voted for it. The package is favored by House Speaker Sal DiMasi. Gov. Deval Patrick originally proposed closing the corporate loopholes, saying some firms were unfairly avoiding paying their fair share of taxes, while others had to pay a full load. House leadership added the cigarette tax to the bill in an effort to raise an estimated $153 million. They also changed the way the loopholes would be closed so they would raise less revenue. State Rep. Steve D'Amico, D-Seekonk, said closing the loopholes will raise about $490 million. However, all but $44 million of the additional revenue will be given back by lowering the tax rate for all corporations from 9.5 percent to 7 percent over three years. D'Amico said he abstained from voting on the measure in committee because he wants the specifics of the bill changed, but did not want to kill it outright. He said he wants the state to keep More of the corporate taxes so it can increase aid to education and cities and towns. He also opposes the increase in the cigarette tax, saying it picks on people with an addiction who tend to be less wealthy. "We should not be balancing the budget on the backs of smokers," he said. State Rep. Jay Barrows, R-Mansfield, also a member of the revenue committee, said he opposes both the cigarette tax increase and the closing of the loopholes. "No new taxes," he said, explaining that the state should instead be finding ways to reduce spending to balance the budget. The higher cigarette tax will encourage smokers to buy their Cigarettes out of state, he said. And raising taxes on corporations during a recession will just hurt the economy More, he said. Closing the loopholes involves technical changes intended to prevent corporations from using bookkeeping devices to avoid taxes. For instance, D'Amico said some corporations with facilities in several states create "paper" subsidiaries to avoid paying Massachusetts taxes. Still, state Rep. Richard Ross, R-Wrentham, a third member of the committee, said Massachusetts should be doing More to attract businesses to Massachusetts, not drive them away with higher taxes. Barrows said the prospects for the bill are uncertain. He noted that most of the senators and all of the Republicans on the revenue committee are opposed. JIM HAND covers politics for The Sun Chronicle. He can be reached at 508-236-0399 or at [email protected].