After 58 days of fighting since Massachusetts implemented its tax on software services, the state's technology industry can now claim a resounding victory: The tech tax is dead.
After a vote of 156 to 1 in the Massachusetts House yesterday, the state's Senate solidified the repeal Thursday with a unanimous 38 to 0 vote. The repeal will be retroactive, which means all taxes previously paid or billed do not have to be collected. The vote now waits on the governor's signature to make it official.
The tech tax was voted into law as part of a transportation finance bill on July 24 and gave businesses only a week of breathing room before it was implemented. The tax was widely heralded as vague and unfair by businesses and was recognized as the highest such tax on services in the nation, with only four other states having a tax on software services.
"It is corrections day," said Sen. Bruce Tarr in the session debate over the repeal. "It's a day for us to join to do the right thing. And more than anything, ... we are pleased that momentum now appears to have been gained to do the right thing."
Those who previously voted for the tax said that they were working on the best information possible at the time and that they believed it was the best option presented to them.
"I'm not sorry that I voted for the tax, because when I did, I believed the tax would have a very small impact. And, I'm not ashamed to say I learned it had a bigger impact. And, I'm not ashamed to say I'm willing to vote renege that vote. But, I'm not ashamed to say that I'm looking for another way to raise the money," said Sen. Cynthia Creem, who proposed a 5-cent gas tax amendment to replace the fund gap created by the repeal. The amendment was rejected, along with several others proposed by various legislators.
Sen. Stephen Brewer, chair of the Senate Ways and Means Committee, said that the legislature has demonstrated "flexibility and courage" to admit that the tax was the wrong move for the state and for business. Brewer voted for the tax and supported it initially after its implementation.
"I'm enormously pleased that we're putting this behind us," said Michael Widmer, president of the Massachusetts Taxpayers Foundation that helped organize the ballot initiative against the tax. "It would have been a terrible black mark on Massachusetts if we'd had to endure it over the next year before the voters repealed it. This is much cleaner. I applaud the legislative leadership and the governor for agreeing to the repeal. It's not easy to change course, so I salute them for coming out and acting so quickly."
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