BOSTON — From a gas tax increase to higher fees for Uber and Lyft rides, months-old plans on Beacon Hill to drum up revenue have been shelved by the COVID-19 outbreak.
Before the pandemic, the Democratic-led Legislature was advancing a host of proposals that relied on higher taxes and fees — such as a 5 cent per gallon gas tax hike — to funnel more money into the state’s aging infrastructure and to help blunt the impact of climate change.
But with nearly a quarter of the state’s workforce unemployed, economists say lawmakers shouldn’t be looking to raise taxes anytime soon.
“The state’s economy is in a shambles, so the worst thing anybody in the Legislature could do would be to impose new taxes,” said David Tuerck, president of the Beacon Hill Institute. “I know that the state is going to be hurting for revenue, but raising taxes would be politically disastrous.”
Tuerck said the state should cut spending and tap into its $3.5 billion rainy day fund to keep the state government running, instead of raising taxes.
Small business groups say any increase in the cost of doing business, with a swath of industries shut down amid the pandemic, would make matters worse.
“Right now, business owners are struggling to survive with their doors closed and no revenue coming in,” said Christopher Carlozzi, state director of the National Federation of Independent Businesses. “Any sort of tax increase on a small business or a consumer at this point would be adding insult to injury.”
Gov. Charlie Baker has scoffed at the idea of a gas tax increase amid the pandemic, but he still supports a multi-state greenhouse gas reduction initiative that would be funded, in part, by increasing consumer gas taxes.
To be sure, economists say the state will eventually need more revenue with tax collections and other sources of funding if the economic fallout from COVID-19 drags on for years, as expected.
The Massachusetts Taxpayers Foundation predicts the state will see a $4.4 billion drop in tax revenues in the fiscal year that begins July 1, a figure that could grow depending on how long people are out of work.
Eileen McAnneny, the group’s president, said while tax proposals are likely shelved for the time being, the state will eventually need to figure out a way to pay for repairs to its crumbling roads and public transit system.
“Some of those proposals will take a back seat in the short term, but the need for investments in transportation hasn’t gone away,” she said.
McAnneny said the state will also be forced to cut spending by changing how it delivers many programs and services to tackle a yet unknown deficit.
“This downtown is impacting all aspects of the economy, which makes it hard to increase taxes,” she said. “There’s no group that could contribute painlessly.”
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at email@example.com
A sophomore at Penn State in the College of Communications studying Public Relations. A social media/digital marketing coordinator as well as an On-Air personality at Barstool Sports.Has experience coordinating events such as Barstool Sports College Gameday Show at Penn State University. Also has experience tracking insights, contributing to social media growth on several platforms, and co-leading a content division focused on a female demographic.