Question 3: The 3% Sales Tax Relief Act

Posted on 28. Jul, 2010 by ywwlawrence in Question 3

Scroll down to read the Attorney General’s official summary.

Our summary:

      This proposed law would roll back the state’s sales and use tax rates from 6.25% to 3% starting on January 1, 2011. If the 3% tax rate does not gather enough revenue to comply with any lawful pledge of sales or use tax revenues, then the rate will be adjusted to the lowest level allowed by law. This would not affect tax moneys owed to the Commonwealth for sales, storage, use or other consumption of personal property or services from before January 1, 2011.

      The state use tax is a tax on items purchased outside of the state or of the country that are used, stored, or consumed in Massachusetts on which no Massachusetts sales tax was paid.

PROS:

• Rolling back the sales tax will save taxpayers over $2 billion
• Boosts the private sector, creating the potential for new jobs

CONS:

• Reduces the money in the state budget by the same $2 billion plus, which could affect public programs, etc.
• Further limiting the state budget could reduce government jobs and limit state programs

Attorney General’s official summary:

This proposed law would reduce the state sales and use tax rates (which were 6.25% as of September 2009) to 3% as of January 1, 2011.  It would make the same reduction in the rate used to determine the amount to be deposited with the state Commissioner of Revenue by non-resident building contractors as security for the payment of sales and use tax on tangible personal property used in carrying out their contracts.

The proposed law provides that if the 3% rates would not produce enough revenues to satisfy any lawful pledge of sales and use tax revenues in connection with any bond, note, or other contractual obligation, then the rates would instead be reduced to the lowest level allowed by law.

The proposed law would not affect the collection of moneys due the Commonwealth for sales, storage, use or other consumption of tangible personal property or services occurring before January 1, 2011.

The proposed law states that if any of its parts were declared invalid, the other parts would stay in effect.