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October 25, 2010

In The Ballot Box

In a matter of days, the voters of Massachusetts will head to the polls to cast their lots with candidates for various political offices. They also have the opportunity to vote on three important ballot questions that we believe should all get ‘no’ votes.

Ballot question No. 1 would remove the 6.25 percent state sales tax from alcoholic beverages. The second would repeal the state’s 40B affordable housing regulation and the third would cut the state sales tax rate to 3 percent.

State government is big and wasteful, but slashing two significant revenue sources in a sour economy is not the way to make it more efficient.

The Massachusetts Taxpayers Foundation has estimated that cutting the sale and use tax to 3 percent would result in $2.5 billion in lost revenue.

The alcohol tax is projected to bring in $110 million for treatment programs each year.

These treatment programs exist for a reason, and alcohol sales are resilient. Keeping that tax in place makes good social sense and it is badly needed state revenue in these tough times.

When it comes to slashing the sales tax as suggested by ballot question No. 2, you might think that leading business groups would be among the supporters. They are not, and we find ourselves in agreement with the Greater Boston Chamber, the Associated Industries of Massachusetts and other business groups that argue that the change would be too abrupt and extreme.

The sales tax rate was increased to its current 6.25 percent last year after being 5 percent for decades. We would support legislation for rolling it back to the original 5 percent level over the next couple years, but that’s not what’s on the ballot. The cut to 3 percent is simply much too draconian to deserve voter support.

According to the Alliance To Roll Back Taxes, cutting the sales tax to 3 percent as of Jan. 1, 2011 would somehow create about 30,000 jobs, presumably out of thin air. To arrive at that total, the Alliance simply reversed equally spurious claims made by the Beacon Hill Institute last year that raising the sales tax from 5 percent to 6.25 percent would result in the loss of 12,000 private sector jobs. This is fuzzy math at best.

With the sales and use tax cut by more than half, we’d be more worried about job loss among police, firefighters and other much-needed public servants than we’d be encouraged about job gains in the private sector.

We’ve seen the private sector tentatively begin hiring in recent months, but smart businesses haven’t been waiting for a sales tax cut to make things better. They’ve been learning how to make ends meet with fewer resources, and we’re not confident that even in an improving economy businesses will be hiring en masse any time soon.

Home Sweet Home

On the repeal of the state’s Chapter 40B affordable housing regulations, we find ourselves reversing our previously held position.

We’ve called for 40B’s repeal in the past, but have come to more fully understand its economic value to the state.

Chapter 40B requires that towns count 10 percent of their housing stock as affordable. That is, affordable for families that make no more than 80 percent of the state’s median income. It allows developers that propose such projects the right to bypass certain local land use regulations.

In the past, we’ve argued that if such housing is so desperately needed, then the market itself would provide for it. The housing bubble and subsequent crash have proven that theory wrong. And today, we’re of the mind that the state will need 40B more than ever as the economy improves.

As home prices in Massachusetts exploded during the housing bubble, families left the state in droves.

As prices have come down since topping out in 2005, demographers and economists have noticed a slight uptick in the number of families moving into Massachusetts. But that momentum is tenuous at best. It isn’t widely affordable, and even the recent housing downturn has not brought affordability to enough of the population to sustain the population growth we need for a robust economy.

Chapter 40B provides the kind of housing the state will need in order to maintain any kind of economic recovery.

If Massachusetts doesn’t have the kind of housing young families want to live in when they come to the state, it will have a direct impact on the quality of life here. Chapter 40B incentivizes the development of that kind of housing, and in towns where residents oppose almost any development or are openly hostile to the word “affordable,” it provides reasonably priced options where there may otherwise be none.

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