May 25,2009 Edition


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The Sales-tax Hike: A Necessary Evil




The state Senate voted to increase the sales tax and lift the sales-tax exemption on alcohol last week, joining the House in such measures, and thus virtually ensuring that they will soon become reality; the margin in both chambers was veto-proof.

Businesses across the broad retail sector lobbied hard against theses steps and bemoaned their passage, saying that they will hurt a number of businesses and drive shoppers to border states, like Connecticut, where the taxes are lower. One Republican senator, obviously in agreement with that assessment, said the senate’s actions should be called “the New Hampshire economic stimulus bill.”

While we agree, to a point, and certainly sympathize with those business owners who stand to be impacted by this legislation, we regard it as a necessary evil at a time when stern measures are needed and there are few, if any, real alternatives.

That said, we agree with Gov. Patrick when he says that the Legislature can’t stop with sales tax hikes when it comes to navigating the state out of its current fiscal crisis. Much more difficult steps, such as reforming the pension systems for transportation agencies and even legislators themselves, must also be enacted.

Going back to the sales tax — this was a step that had to be taken, and taken now. The state is a deep fiscal hole, and there is simply no way of climbing out without a tax increase of some sort. “We cannot cut our way out of this problem,” proclaimed one state senator, who was saying, in essence, ‘yes, we can cut enough, but we certainly don’t want to.’

He’s right, and the reason why is that the stakes are simply too high right now — across the state and especially here in Western Mass., a region that seems even more dependent than others on a healthy, or healthier, state budget to remain vibrant.

A quick look at the programs that stand to benefit from the hike in the sales tax — workforce training, summer jobs for youths at risk, regional tourism councils, special education, and rental housing assistance — reveals just how important this additional revenue is to the state, for the short and long term.

From the even-bigger-picture perspective, the Western Mass. region, as we’ve said many times, is, while diverse, greatly dependent on the education and health care sectors (eds and meds) for its livelihood. Not all the colleges are public, certainly, but many, including the flagship campus of the University of Massachusetts and several community colleges, are somewhat dependent on contributions from the Commonwealth. If the state isn’t sound fiscally, these instiutions suffer greatly, and, in the long run, the business community will suffer as well.

The same is true of many of the region’s health care providers, who rely on the state to help close the gap between what it costs to provide care and what these providers receive from payers. It is in the best interest of these institutions, and this region as a whole, to have a state that is in sound fiscal health — or as sound as these trying conditions will allow.

The sales tax increase, like any tax hike, will be painful for some, and it comes at a time when many are already experiencing great pain. But to attempt to balance the budget with cutbacks will produce more pain and spread it to more people.

So while it’s difficult to support any piece of legislation that will harm businesses, this measure is, indeed, a necessary evil.