Tech tax repeal push clears first hurdle
Next steps unclear as tech tax opponents make case to state leaders
STATE HOUSE NEWS SERVICE
A push to repeal the new sales tax on computer and software design services through a ballot initiative cleared it first hurdle on Wednesday as a summit between Beacon Hill officials and tech industry leaders broke apart with no agreement from lawmakers to readdress the controversial tax.
The much-anticipated meeting between Gov. Deval Patrick, legislative leaders and technology sector executives ended Wednesday afternoon after about 90 minutes, and attendees scattered from the governor’s office as an expected press conference with participants was waived off by the governor’s staff.
Patrick, House Speaker Robert DeLeo and Senate President Therese Murray met with seven tech leaders to discuss the news sales tax on computer and software design services, which was included in the Legislature’s $500 million revenue package to finance state budget and transportation investments. As some filtered out of side doors to the governor’s suite, many attendees refused to stop and talk after huddling in the Corner Office.
“We engaged in a very thoughtful and informative discussion with a number of business leaders in today’s meeting with Governor Patrick. We look forward to continuing these conversations and talking with our members in the House and Senate,” DeLeo and Murray said in a joint statement after the meeting. After clashing with Patrick on tax policy this year, neither were available to discuss what might be the next steps in the debate.
Housing and Economic Development Secretary Greg Bialecki said the administration “just listened.”
Andy Singleton, the CEO of the Needham-based software design firm Assembla, did stop to talk.
“As a guy who works in the tech sector, we did want to figure out if the legislative leaders were hearing anything we’re saying about the difficulty complying with this tax and I’m satisfied they did listen to us and they did understand the difficulty. The governor made clear that he wants to fund his transportation initiative so that’s where we left it,” Singleton told reporters.
Michael Widmer, president of the Massachusetts Taxpayer Foundation, told the News Service in a phone interview after the meeting that Patrick had opened the meeting by telling those in attendance he hoped to have experts describe the perceived problems, complexities and potential impact on the innovation economy that could stem from the new tax. Legislative leaders listened, but gave no signals about next steps, according to two attendees.
Widmer said the message conveyed by him and other tech leaders was that the tax needs to be repealed because “it’s just not fixable.”
“There was only a sense that they’re willing to work on this issue within the parameters that the governor and the legislators previously set, which is that they would like to fund their transportation initiative. That’s the way I understood it,” Singleton said.
Speaking only for himself, Singleton said he supports repealing the software sales tax. “I personally believe the law should be repealed. It’s going to very difficult to fix. It’s too vague. It says some bad things about the state of Massachusetts,” he said.
Patrick and legislative leaders sharply disagreed this spring and summer over the level of tax increases to pay for transportation, with the tax law passing only after Democrats overrode Patrick’s veto of the legislation.
Before the meeting, Patrick said at an event in Watertown that he was in listening mode as he prepared for the meeting. “Today I’m listening. As I said earlier, it’s a little peculiar to be listening to people who were advocates of this when the Legislature proposed it, but I guess one has to suspend some of that and just listen,” he told reporters.
Patrick was referring specifically to people like Widmer and Associated Industries of Massachusetts who endorsed the framework of the transportation financing proposal in April that included the software tax before coming out strongly against the provision.
Widmer said comments like that made by Patrick and others made publicly by Senate President Murray about the timing of the business leader’s opposition to the technology sales tax didn’t come up during the meeting.
“I’ve tried not to make it personal. We went to her and to Senate and House leadership in mid-May and said we’ve done a much deeper research and analysis than anyone has done and concluded this is a much more serious problem than any of us, including in the business community, understood. It was done in good faith. They chose not to address it,” Widmer told the News Service.
Patrick said he wanted to make sure his administration has done everything it could to make the application of the new tax, criticized as too vague, as “sensible and predictable as possible.” “If there is to be consideration of repealing it, then it needs to be replaced with something that enables us to invest in the transportation needs that these same people agree is important,” the governor said.
Widmer said there is recognition in the business community that legislative leaders would be hard pressed to reopen the tax debate with an alternative proposal to generate at least $161 million in new revenue to replace the software tax, but said that won’t stop the push to repeal the tax at the ballot box in 2014.“The reality is there wasn’t really any discussion of alternative revenues, and that’s going to be difficult to achieve,” Widmer said, calling the meeting “productive, cordial and focused” nonetheless. “I have no specific sense of where it goes from here. Will they address it or not? I don’t know how to handicap that.”
Before the meeting broke up, the governor’s staff had set up a podium and sound system outside Patrick’s office for officials to brief the media after the meeting. Around 1 p.m. however, the governor’s communications director Jesse Mermell came out to announce the meeting was over and there would be no availability with attendees.