Last week Massachusetts State Treasurer and Democratic gubernatorial candidate Stephen Grossman recommended an Internet sales tax to generate $250 million in annual revenue for transportation infrastructure projects throughout the state.
According to the South Coast Today, Grossman stated that the revenue generated by an Internet sales tax would bridge the gap between current funding and the $13 billion transportation package signed by the governor in April. Currently the only internet retail service that has a deal with Massachusetts to collect sales tax is Amazon.
State Representative William Straus (D-Mattapoisett), House chairman of the Legislature’s Joint Committee on Transportation, disagrees with Grossman on whether revenue from an Internet sales tax is necessary to fund the planned transportation projects, citing the increase in tobacco and state gas tax as well as proceeds from sales tax on vehicles and budget revenue to support day-to-date operations.
While stating that the use of an Internet sales tax for transportation funding is preliminary, State Senator Mark Montigny (D-New Bedford) said of Grossman’s plan, “I don’t have faith that the (other) income streams will be adequate. It’s an area worth exploring. I want to make sure the financing (for South Coast Rail) is solid.”
The Internet sales tax would be in addition to the nearly $13 billion transportation bond bill approved by the House and Senate in April.The transportation bond bill is anticipated to enable work on many “high profile” projects. The House passed the measure with a vote of 150-2, which the Senate subsequently passed unanimously. It was signed by the governor on April 18. The bill included: $2.3 billion for commuter rail service expansion, up to $1.3 billion for Massachusetts Bay Transportation Authority’s Green Line extension to Medford, and $2.5 billion for the acquisition of new Red and Orange Line trains. In addition, the bill also requested $300 million for local road improvements, $100 million more than what was initially proposed.
To fund projects, such as a rail link between South Coast and Boston, bonding of $2.3 million was authorized by state and federal regulatory agencies. Grossman stated that, while it can provide part of the revenue, bonding alone would be insufficient for the projects entailed in the transportation plan advanced by the governor. To the Standard-Times’ editorial board he said, “The problem is … we don’t have the bonding capacity to do anywhere near a fraction of that… It’s just not there. We’ve got about $19 billion of general obligation bonds (authorized). We can sell about $2 billion of general authorization bonds a year and still maintain our double-A bond rating.”