Raising taxes being debated; From taxing sales to nickels on candy.

BOSTON - House lawmakers faced with making deep cuts to state programs and local non-school aid will be debating a series of tax proposals, as budget amendments were filed yesterday to raise the sales tax, extend new taxes to alcohol, soda and candy, authorize new local meals taxes up to 3 percent and to tax large nonprofit institutions.

Bill Rennie, vice president of the Retailers Association of Massachusetts, said yesterday raising the sales tax, which has remained at 5 percent since the mid-1970s, would cost the state at least 10,000 jobs and drive consumer sales across state borders.

“It would have a chilling effect on an already cold economy, and it couldn’t come at a worse time,” he said. He said it would also undermine federal stimulus efforts to ease credit and revitalize consumer spending. “Everything coming from the federal government is aimed at getting customers out to start spending again and the sales tax just works in the opposite direction,” he said.

Talk of tax increases to save programs and jobs at the state and local level will come to a head April 27 when House members return from a break from formal sessions for a scheduled budget debate.

In the meantime, groups backing state programs and funding for police and fire departments, the elderly and low-income families facing homelessness will be busy making the case for new revenues.

Luz Ramirez, a Worcester spokeswoman for Neighbor to Neighbor, which advocates for programs for low-income families, said the proposed cuts to virtually all social safety net programs, will have a devastating impact on thousands of families.

She said a major concern is a proposed 40 percent cut in the state’s rental voucher program. The cut, from $33 million to $17 million to take effect July 1, would eliminate rental assistance for about 2,900 households statewide, forcing many into homelessness.

The trickle-down effect of a proposed 32 percent cut in state non-school aid to cities and towns, Ms. Ramirez said, could have a severe impact on public health in Worcester, as well as programs for inner city youth, potentially putting the Worcester Youth Center in danger of closing.

She said the city may have to shut down key public health programs, cutting off services of public health nurses to poor families, while needed police and fire personnel could be reduced in the city.

“Why not use the state rainy day funds now when it is needed,” she said of the $1.2 billion state reserves that would not be tapped next year under the proposed House spending plan. “We also should look at new revenues instead of cutting programs, which is only going to hurt people. Cutting programs is not a real solution. We need new revenue to keep the programs we have,” especially in light of rising unemployment, she said.

Neighbor to Neighbor plans to hold press conferences around the state including in Worcester next week to pressure legislators to restore funds in the budget.

While many lawmakers said this week they doubt the House will accept tax increases while tens of thousands of residents are losing their jobs and going without pay raises, others expect the dire conditions posed by spending cuts will give them an opening to press for more revenue.

State Rep. James J. O’Day, D-West Boylston, said he is backing a proposal to expand the sales tax to include alcoholic beverages. Rep. Paul J. Kujawski, D-Webster, has set his sites on taxing multibillion-dollar nonprofit endowments, including those of wealthy schools such as Harvard University.

A proposal, filed by state Rep. Peter V. Kocut, D-North Hampton, would allow cities and towns to hike meals taxes by 3 percent as long as the local city council or town meeting approves it. Another amendment calls for the state to allow cities and towns to tax telephone poles and equipment exempt from local property taxes since 1915.

Mr. Kujawski has proposed a 2.5 percent annual tax on amounts over $1 billion in university endowments. He said it would bring in $750 million to $1 billion annually.

The Webster Democrat said while many lawmakers believe there is public support for tax increases because of the dire impact of budget cuts, he is not convinced a majority will pull the tax hike lever a week from Monday.

“One thing I have learned is you better know how to count to 81 in the House and I don’t think 81 members will support that,” he said of the sales tax increase.

“I think there is a tremendous sensitivity to people’s pocketbooks. People are losing their jobs, people are losing their houses. People don’t have disposable income and are just trying to make their lives comfortable in this difficult time,” he said.

Rep. Karyn E. Polito, R-Shrewsbury, said taxpayers are aware billions in federal bailout dollars are coming into the state to close local budget gaps, and will not accept tax increases. She said it would be “a trifecta” of mistakes for Democrats to raise taxes and then later this year vote in casinos for new revenue. But she said, “I think the majority party is heading in that direction.

“We have this stimulus money coming into the state to help balance the budget without having to go to the taxpayers,” she said.