BOSTON – Gov. Deval Patrick and legislative leaders met with business leaders on Wednesday to discuss opposition to a new state sales tax on computer and software services, but no immediate decisions were made on the future of the tax.
The measure, approved last month as part of a transportation financing plan, has drawn sharp criticism from technology companies. They have called the so-called 'tech tax' vague and confusing, while warning it could harm a key sector of the state's economy and cost jobs.
Patrick convened the closed-door meeting in his office after business-backed groups, including the Massachusetts Taxpayers Foundation, announced they would ask Massachusetts voters to repeal the tax if lawmakers did not do so first.
Michael Widmer, president of the foundation, said Patrick, House Speaker Robert DeLeo and Senate President Therese Murray listened to the arguments during the session, but made no promises.
"It raised awareness among political leaders that this tax is unfixable and needs to be repealed," Widmer said of the meeting.
The tax was estimated to produce $161 million in the current fiscal year, and Widmer said business leaders acknowledged that removing that revenue would leave a hole in the state budget. Patrick and top lawmakers have insisted that any change in the tax would have to be replaced by another, equivalent source of revenue.
The governor's office originally said Patrick would speak at the conclusion the meeting, but when reporters gathered outside his office they were told he would have no immediate comment. An aide called the mix-up a "misunderstanding."
In a written statement issued later in the day, Patrick said he had a "constructive and robust conversation" with the industry leaders and lawmakers over both the issues surrounding the tax and the need to fund improvements in the state's transportation system.
"While we did not arrive at a solution, we all committed to seeking one together over the next few weeks," the governor said.
Patrick had previously pointed to efforts by his administration to narrow the scope of the 6.25 percent sales tax on software services. For example, the Revenue Department ruled that modifications or enhancements made to open source software, which is generally free and downloadable on the Internet, would not be subject to the tax.
DeLeo and Murray issued a joint statement calling Wednesday's discussion thoughtful and informative, and promising to hold further conversations with members of the House and Senate. At least one repeal bill has already been filed and Republican lawmakers have said they would push strongly to eliminate the tax.
In a separate development, Attorney General Martha Coakley certified on Wednesday that a proposed ballot question filed by business groups to repeal the tax was constitutional and could move forward. The question could appear on the November 2014 state ballot if lawmakers do not act in the interim.