State senator Karen Spilka filed a bill last week to repeal the much-maligned sales tax on pre-written software that went into effect Aug. 1.
Spilka, a Democratic senator who represents the tech industry-heavy areas of Middlesex and Norfolk, proposed a bill to the state Tax Fairness Commission to explore other avenues of collecting the estimated US$160 million generated by the software tax.
“We have all been heralding that we are in an innovation economy in Massachusetts,” said Spilka. “It appears to me this is the opposite direction that we, as a tech hub, want to be going.”
The tax has met vocal opposition from the software and business community. A coalition of business groups has launched a ballot campaign to repeal the tax next November. Websites like Repeal the IT Service Tax have also sprouted up.
The biggest criticism of the tax is its overbroad nature. The 6.25% tax applies to a variety of computer-software related services such as modifying off-the-shelf software, configuring programs, and designing or developing websites. Yet the Massachusetts High Technology Council, in conjunction with the Massachusetts Taxpayers Foundation, estimated the tax could amount to a $500 million annual tax burden on the software industry.
Spilka, who initially supported the $800 million transportation finance bill that included the software tax, admitted she didn’t realize the full scope of its impact on the software industry. She also happens to be running for an open U.S. House of Representatives seat, but insisted her motivation for introducing the bill was the complaints from constituents.
She is far from the only legislator to voice criticism of the bill, only the first to act.
Mass. Republican House Minority Leader Brad Jones said, “We’re attacking the heart of our economy.”