Campaign 2010 | The Ballot Questions

Voter initiatives target two taxes

Voters could reduce sales, alcohol levies

By Peter Schworm
Globe Staff / October 27, 2010

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With jobs scarce and many families just scraping by, taxes have taken center stage this political season. In Tuesday’s election, Massachusetts voters will have two opportunities to lower them.

Two ballot questions are aimed at sales tax increases adopted last year as the state struggled to meet budget demands. The most far reaching, Question 3, would reduce the state’s sales tax from 6.25 percent to 3 percent.

Supporters say it would give cash-strapped households some financial breathing room, and jump-start struggling businesses. Lawmakers had raised the sales tax from 5 percent to 6.25 percent last summer to avoid steep budget cuts amid plummeting revenues.

Opponents, including a number of business groups, say the tax cut would decimate government revenues, deepen the state’s projected budget deficit, and force communities to lay off police officers, firefighters, and public school teachers. State finance officials say it would reduce tax revenue by an estimated $2.5 billion next fiscal year.

“This is exactly the wrong time to do this,’’ said Stephen Crawford, a spokesman for the Massachusetts Coalition for Our Communities, a coalition of labor unions and other opponents of the ballot initiative. “Every major business group in the state says the same thing: It’s bad for our economy; it’s bad for our recovery.’’

Crawford said the reduced tax revenue would undermine state subsidies to cities and towns that have already scaled back spending.

The Massachusetts Taxpayers Foundation, a tax policy research group, estimates that approving Question 3 would result in 28 percent budget cuts to “virtually all state programs’’ and the layoff of thousands of municipal employees.

On the other side of the debate, The Beacon Hill Institute, a conservative think tank at Suffolk University, says that cutting the tax rate would provide a boost to retail businesses that would create some 27,000 jobs and $1 billion in higher wages.

“Yes on 3 is a job-creating machine,’’ said Carla Howell, chairwoman of the Alliance To Roll Back Taxes, which collected 19,000 signatures to put the measure on the ballot. “It will be a huge boost to retail business.’’

The tax cut would save the average family $900 a year, said Howell. State leaders can offset the lost revenue by reducing wasteful and low-priority spending, she said, and will not reduce spending unless voters force them to.

Voters appear divided over the question, eager to pay less for everyday items but worried about the impact on schools, public safety, and other government services. In the most recent Boston Globe poll, half of likely voters said they oppose the proposal, while 43 percent support it.

The other tax initiative, Question 1, would eliminate a sales tax on beer, wine, and liquor. Liquor store owners say that since the tax was imposed as part of the fiscal 2010 budget they have lost business to New Hampshire, which has no sales tax on alcohol.

P.J. Foster, a spokesman for the Yes on One Committee, said Massachusetts stores near the New Hampshire border report sharp declines in sales, forcing some to lay off workers. Alcoholic beverages are already subject to an excise tax, supporters note.

Many customers are delaying bulk purchases until they visit New Hampshire, Foster said, costing Massachusetts stores significant business.

Jim McManus, a spokesman for the statewide campaign against Question 1, said alcohol “does not deserve a special tax break’’ and that all 45 states that levy sales taxes extend them to beer, wine, and liquor.

McManus said alcohol sales in Massachusetts remain strong and New Hampshire sales have not surged.

“The tax is not preventing people from buying alcohol or hurting business,’’ he said. “I don’t think too many people are going to pay the money to drive to New Hampshire to buy beer or wine.’’

Exempting alcohol from the tax would eliminate an estimated $110 million in revenue, according to the state Department of Revenue. The recent Globe poll indicated that 52 percent opposed the tax cut, with 37 percent in favor.

A third ballot question asks voters if they want to repeal the state’s affordable housing law, which gives developers incentives to set aside a portion of housing developments for lower-income residents.

The law allows developers to sidestep some local zoning laws to build multifamily projects if they offer 20 percent or more of the units at below-market rates. It has been controversial in some communities, particularly those where codes favor single-family homes over big complexes.

John Belskis, chairman of the Coalition to Repeal 40B, called the law “a mess’’ that takes power away from local residents and officials and hands it to developers. “It’s abusing cities and towns,’’ he said.

Supporters of the law credit it with spurring the creation of tens of thousands of affordable, multifamily units that would otherwise be prohibited under local zoning. “It’s been the main tool to create affordable housing across the state,’’ said Aaron Gornstein of the Citizens’ Housing and Planning Association. “Without this law, there would be very little built.’’

In the recent Globe poll, 24 percent of those asked backed repealing the law, 38 percent opposed it, and 38 percent said they didn’t know enough to say.

All three ballot measures are binding, meaning they will become law if approved. They would all take effect Jan. 1.

Peter Schworm can be reached at