Mass. Governor Says He Now Supports Repeal And Replace Of Tech Tax

After meeting with local businesses and industry groups, Massachusetts Gov. Deval Patrick announced Tuesday that he supports the repeal of the state's controversial tech tax -- if it is replaced by an alternate source of revenue.

The Governor had previously remained silent on the issue as tech businesses around the state fought for its repeal through the legislature, the courts, and a ballot initiative. The announcement comes a week after the Governor held a closed-door meeting to discuss the issue and one day after Republicans announced their intention to file a second bill with the legislature to repeal it.

"I’ve listened hard to the leaders in the tech industry and elsewhere in the business industry," Patrick said to a group of reporters. "We had a really good meeting last week and I think that that meeting was useful for some of the folks who were thinking about whether the solution was a narrower interpretation. And I think that the consensus in the room probably was that replacing it with something was the better way to go. And I think the hard part now is to figure out what to replace it with."

[Related: How Did It Happen? The Massachusetts Tech Tax Timeline ]

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Patrick said that the effect the tax was having on the state's reputation as a technology hub was particularly concerning, something that attendees said was discussed at the Wednesday closed-door meeting.

"I think it’s a serious blot on our reputation as an innovation center. And we’ve worked really, really hard, together with many of the people who were in that room to raise our profile and to earn our reputation as an innovation hub and we should be concerned about anything that blemishes that," Patrick said.

In his comments, Patrick reminded reporters that he vetoed the tax before it was overridden into law by the legislature. At the time of the veto, Patrick said in a statement that his reasoning was that the bill did not raise enough capital, not in a protest to the tech tax.

"I find it ironic that as the architect of this tax, the Governor now sees what a terrible proposal he created and now wants it repealed. I look forward to the Governor leading and working as hard for the repeal of the tax as he did for the passage of the tax," Rep. Marc Lombardo said in an email. Lombardo voted against the tax in the legislature.

[Related: State Reps Question Massachusetts Governor's Change Of Heart On Tech Tax ]

The Governor said that he supports the repeal of the tax, but maintains his position that it should be replaced by another form of revenue. He said that he wants to work together with the legislature to find a solution that will satisfy all sides of the issue.

Those still working to fight the tech tax are wary that Patrick's statement will actually slow down the repeal effort instead of accelerate the pace in the legislature.

"Gov. Patrick's announcement today is not a victory by a longshot," said Andrew Faria, CEO of iMedia Solutions and a vice president with the Spark Coalition, which is fighting against the tax.

Faria said that the Governor's push for replacing the tax instead of outright repealing it will make the process take much longer as the legislature works to also agree upon a suitable replacement. Faria said that local businesses don't have time to wait for the legislation to be passed as they are held liable for incorrect implementation of the tax.

"We can't wait weeks or months for this to go through legislation," Faria said.

In particular, he said senate leaders Therese Murray and Stanley Rosenberg appear to be holding their ground in support of the tax and that this announcement will provide one more reason for them to hold course.

"We haven't heard any changes from them, as a matter of fact we're hearing from people who know them that they're not budging," Faria said.

Faria said that the Spark Coalition will continue to fight for the repeal of the tax, without a replacement.

"The pressure is staying on," Faria said.