Governor Deval Patrick's Budget Recommendation - House 2 Fiscal Year 2009

Governor's Budget Recommendation FY 2009

Tax Expenditure Budget


 
Fiscal Year 2009 Tax Expenditure Budget: Appendix B
Summary Table
 
Sales Tax (in Millions)

Tax Expenditure
Item
Number

FY2007

FY2008

FY2009

EXEMPT ENTITIES
Exemption for Sales to the Federal Government 3.001 N.A. N.A. N.A.
Exemption for Sales to the Commonwealth 3.002 N.A. N.A. N.A.
Exemption for Sales to Tax-Exempt Organizations 3.003 194.2 198.6 202.5
Exemption for Sales of Tangible Personal Property to Motion Picture Production Companies 3.004 0.3 0.8 1.3

EXEMPT PRODUCTS/SERVICES
Exemption for Food 3.101 474.8 486.0 495.7
Exemption for Certain Food and Beverages Sold in Restaurants 3.102 N.A. N.A. N.A.
Exemption for Clothing 3.103 228.6 234.0 238.7
Exemption for Medical and Dental Supplies and Devices 3.104 269.0 281.5 295.8
Exemption for Water 3.105 24.3 24.9 25.4
Exemption for Newspapers and Magazines 3.106 30.9 30.8 30.6
Exemption for the American Flag 3.107 N.A. N.A. N.A.
Exemption for Certain Precious Metals 3.108 N.A. N.A. N.A.
Exemption for Cement Mixers 3.109 N.A. N.A. N.A.
Exemption for Aircraft & Aircraft Parts 3.112 8.7 9.0 0.4

EXEMPT, TAXED UNDER ANOTHER EXCISE
Exemption for Alcoholic Beverages 3.201 84.0 85.9 86.7
Exemption for Motor Fuels 3.202 427.1 469.4 471.3
Exemption for Hotel/Motel Rooms 3.203 111.3 118.4 125.9

EXEMPT COMPONENT OF A PRODUCT OR CONSUMED IN PRODUCTION
Exemption for Items Used in Making Clothing 3.301 N.A. N.A. N.A.
Exemption for Materials, Tools, Fuels and Machinery Used in Manufacturing 3.302 N.A. N.A. N.A.
Exemption for Materials, Tools, Fuels and Machinery Used in Research and Development 3.303 52.9 55.4 57.9
Exemption for Materials, Tools, Fuels, and Machinery Used in Furnishing Power 3.304 118.4 121.0 118.8
Exemption for Materials, Tools, Fuels, and Machinery Used in Newspaper Printing 3.306 46.1 47.2 48.1
Exemption for Materials, Tools, Fuels, and Machinery Used in Agricultural Production 3.308 7.7 7.8 4.9
Exemption for Vessels, Materials, Tools, Fuels, and Machinery Used in Commercial Fishing 3.309 7.1 7.2 7.2
Exemption for Materials, Tools, Fuels and Machinery Used in Commercial Radio and TV Broadcasting 3.310 N.A. N.A. N.A.

EXEMPTIONS FOR SPECIFIED USES OF PRODUCTS/SERVICES
Exemption for Electricity 3.401 253.9 266.7 280.0
Exemption for Fuel Used for Heating Purposes 3.402 53.8 57.6 57.0
Exemption for Piped and Bottled Gas 3.403 149.3 150.8 153.8
Exemption for Steam 3.404 11.5 11.5 11.5
Exemption for Certain Energy Conservation Equipment 3.405 N.A. N.A. N.A.
Exemption for Funeral Items 3.406 9.2 9.4 9.6
Exemption for a Motor Vehicle for a Paraplegic 3.407 1.0 1.0 1.0
Exemption for Textbooks 3.408 15.6 16.3 17.0
Exemption for Books Used for Religious Worship 3.409 N.A. N.A. N.A.
Exemption for Containers 3.410 116.7 119.1 121.2
Exemption for Certain Sales by Typographers, Compositors, Color Separators 3.411 N.A. N.A. N.A.
Exemption for Sales of Building Materials and Supplies to be Used in Connection with Certain Construction Contracts 3.412 147.6 150.9 153.4
Exemption for Commuter Boats 3.417 N.A. N.A. N.A.
Exemption for Fuels, Supplies and Repairs for Vessels Engaged in Interstate or Foreign Commerce 3.418 0.4 0.4 0.5
Exemption for Fuel Used in Operating Aircraft and Railroads 3.419 29.9 31.6 31.8
Exemption for Sales of Certain New or Used Buses 3.420 N.A. N.A. N.A.
Exemption for Films 3.421 N.A. N.A. N.A.
Exemption for Telephone Services 3.422 44.6 44.6 44.6

EXEMPT NOT TAXABLE AS TANGIBLE PERSONAL PROPERTY
Nontaxation of Transfers of Real Property 3.501 2,881.2 2,778.0 2,706.4
Nontaxation of Rentals of Real Property 3.502 979.6 998.8 1,028.2
Nontaxation of Certain Services 3.503 6,465.3 6,739.9 6,998.7
Nontaxation of Internet Access and Related Services 3.504 92.8 95.2 97.9

MISCELLANEOUS EXEMPTIONS
Exemption for Casual or Isolated Sales 3.601 N.A. N.A. N.A.
Exemption for Vending Machine Sales 3.602 N.A. N.A. N.A.
Exemption for Certain Meals 3.603 6.4 9.8 10.3
Exemption for Certain Bed and Breakfast Establishments from Sales Tax on Meals and Room Occupancy Excise 3.604 N.A. N.A. N.A.
Exemption for Certain Summer Camps from Sales Tax on Meals and Room Occupancy Excise 3.605 1.2 1.2 1.3
Exemption for Trade-in Allowances for Motor Vehicles and Trailers 3.606 82.9 84.7 86.1
Exemption for Publications of Tax-Exempt Organizations 3.607 7.5 7.7 7.8
Exemption for Gifts of Scientific Equipment 3.608 N.A. N.A. N.A.
Exemption for Vessels or Barges of 50 Tons or Over 3.609 N.A. N.A. N.A.
Exemption for Rental Charges for Refuse Containers 3.610 N.A. N.A. N.A.
Exemption for Honor Trays 3.611 N.A. N.A. N.A.
SALES TAX TOTAL   13,435.9 13,752.8 14,029.0



List of Sales Tax Expenditures
3.000 EXEMPT ENTITIES
 
3.001 Exemption for Sales to the Federal Government
Sales to the federal government are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(d)
Estimate:  N.A.

3.002 Exemption for Sales to the Commonwealth
Sales to the Commonwealth, its agencies and political subdivisions are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(d)
Estimate:  N.A.

3.003 Exemption for Sales to Tax-Exempt Organizations
Non-profit organizations are exempt from sales tax on purchases of goods and services to be used in carrying out their tax-exempt purposes.

Origin:  M.G.L. c. 64H, S. 6(e) and (x)
Estimate:  $202.5
This estimate excludes sales of building materials and supplies used in construction contracts, which are covered under item 3.412.
3.004 Exemption for Sales of Tangible Personal Property to Motion Picture Production Companies
Sales of tangible personal property to a qualifying motion picture production company or to an accredited film school student for the production expenses related to a school film project are exempt from the sales tax.

Origin:  M.G.L. c. 64H, S. 6(ww)
Estimate:  $1.3

3.100 EXEMPT PRODUCTS/SERVICES
 
3.101 Exemption for Food
Food for human consumption is exempt from sales tax, including food purchased with federal food stamps. The exemption does not cover meals served in restaurants and similar establishments. Meals are taxed under the sales tax at a rate of 5%.

Origin:  M.G.L. c. 64H, S. 6(h) and (kk)
Estimate:  $495.7

3.102 Exemption for Certain Food and Beverages Sold in Restaurants
Although generally food and beverages sold in restaurants are taxed, there are certain exceptions. These are: a) food sold by weight, measure, count, or in unopened original containers or packages (for example, milk, meat, bread); b) beverages in unopened original containers which have a capacity of at least 26 fluid ounces; and c) bakery products sold in units of six or more.

Origin:  M.G.L. c. 64H, S. 6(h)
Estimate:  N.A.

3.103 Exemption for Clothing
Sales of clothing or footwear up to $175 per item are exempt from sales tax. The exemption does not include special clothing or footwear designed for athletic or protective uses and not normally worn except for these uses.

Origin:  M.G.L. c. 64H, S. 6(k)
Estimate:  $238.7

3.104 Exemption for Medical and Dental Supplies and Devices
Medical and dental supplies and devices, such as prescription drugs, oxygen, blood, artificial limbs and eyeglasses, are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(l) and (z)
Estimate:  $295.8

3.105 Exemption for Water
Sales and service of water are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(i)
Estimate:  $25.4

3.106 Exemption for Newspapers and Magazines
Newspapers and magazines are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(m)
Estimate:  $30.6

3.107 Exemption for the American Flag
The American flag is exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(w)
Estimate:  N.A.

3.108 Exemption for Certain Precious Metals
Sales valued at $1,000 or more of the following precious metals are exempt from the sales tax: rare coins of numismatic value; gold or silver bullion or coins; and gold or silver tender of any nation which is traded and sold according to its value as precious metal. Fabricated precious metals that have been processed or manufactured for industrial, professional, or artistic use do not qualify for the exemption.

Origin:  M.G.L. c. 64H, S. 6(ll)
Estimate:  N.A.

3.109 Exemption for Cement Mixers
Concrete mixing units mounted on the back of trucks are exempt from sales tax. Spare parts for such units are also exempt. The truck chassis is subject to sales tax.

Origin:  M.G.L. c. 64H, S. 6(y)
Estimate:  N.A.

3.112 Exemption for Aircraft & Aircraft Parts
Airplanes, helicopters, balloons and other aircraft are exempt from sales tax. Also exempt are parts used exclusively for the repair of aircraft. Governor's FY09 Budget proposal would eliminate this exemption. The figure below reflects this change.

Origin:  M.G.L. c. 64H, S. 6(uu) and (vv)
Estimate:  $0.4

3.200 EXEMPT, TAXED UNDER ANOTHER EXCISE
 
3.201 Exemption for Alcoholic Beverages
Alcoholic beverages, except those sold as part of a meal, are exempt from sales tax. They are subject to an excise tax determined by volume rather than retail price.

Origin:  M.G.L. c. 64H S. 6(g)
Estimate:  $86.7

3.202 Exemption for Motor Fuels
Motor fuels are exempt from sales tax. They are subject to an excise at a rate higher than 5% of the retail price. The estimate represents revenues that would be collected under the sales tax if motor fuels were taxed at 5% of the retail price. The Massachusetts motor fuels tax rate is $0.21 per gallon of gasoline or diesel fuel.

Origin:  M.G.L. c. 64H, S. 6(g)
Estimate:  $471.3

3.203 Exemption for Hotel/Motel Rooms
Rental charges for real property are exempt from sales tax. However, rentals of rooms in hotels, motels or lodging houses are subject to a state excise at a rate of 5.7% of the rental price, and, at a municipality's option, to a local excise of up to 4% of the rental price. A Convention Center financing fee of 2.75% is also included in certain areas.

Origin:  General exclusion of real property transactions
Estimate:  $125.9

3.300 EXEMPT COMPONENT OF A PRODUCT OR CONSUMED IN PRODUCTION
 
3.301 Exemption for Items Used in Making Clothing
Sales of materials used in making clothes, such as thread and fabric, are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(v)
Estimate:  N.A

3.302 Exemption for Materials, Tools, Fuels and Machinery Used in Manufacturing
Materials, tools, fuels and machinery, including spare parts, used in manufacturing are exempt from sales tax if they become components of a product to be sold or are consumed or directly used in the manufacturing process.

Origin:  M.G.L. c. 64H, S. 6(r) and (s)
Estimate:  N.A

3.303 Exemption for Materials, Tools, Fuels and Machinery Used in Research and Development
Materials, tools, fuels and machinery, including spare parts, used in research and development by certified manufacturing or research and development corporations are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(r) and (s)
Estimate:  $57.9

3.304 Exemption for Materials, Tools, Fuels, and Machinery Used in Furnishing Power
Materials, tools, fuels, and machinery, including spare parts, used in furnishing gas, water, steam, or electricity to consumers through mains, lines or pipes are exempt from sales tax if they are consumed or directly used in furnishing the power.

Origin:  M.G.L. c. 64H, S. 6(r) and (s)
Estimate:  $118.8

3.306 Exemption for Materials, Tools, Fuels, and Machinery Used in Newspaper Printing
Materials, tools, fuels, and machinery, including spare parts, used in newspaper printing are exempt from sales tax if they become components of a product to be sold or are consumed or directly used in newspaper publishing.

Origin:  M.G.L. c. 64H, S. 6(r) and (s)
Estimate:  $48.1

3.308 Exemption for Materials, Tools, Fuels, and Machinery Used in Agricultural Production
Materials, tools, fuels, and machinery, including spare parts, used in agricultural production are exempt from sales tax if they become components of products to be sold or are consumed or directly used in agricultural production. The exemption includes the same items when used for the production of livestock, poultry and animals in research. Also included are seeds and plants used to grow food for human consumption outside the agricultural industry (e.g., by home gardeners). Governor's FY09 Budget proposal would eliminate this exemption for pesticides. The figure below reflects this change.

Origin:  M.G.L. c. 64H, S. 6(r), (s) and (p)
Estimate:  $4.9

3.309 Exemption for Vessels, Materials, Tools, Fuels, and Machinery Used in Commercial Fishing
Materials, tools, fuels, and machinery, including spare parts, used in commercial fishing are exempt from sales tax if they become components of a product to be sold or are consumed or directly used in commercial fishing.

Origin:  M.G.L. c. 64H, S. 6(r), (s) and (o)
Estimate:  $7.2

3.310 Exemption for Materials, Tools, Fuels and Machinery Used in Commercial Radio and TV Broadcasting
Materials, tools, fuels and machinery, including spare parts, used in commercial radio and TV broadcasting are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(r) and (s)
Estimate:  N.A.

3.400 EXEMPTIONS FOR SPECIFIED USES OF PRODUCTS/SERVICES
 
3.401 Exemption for Electricity
Residential electricity, electricity purchased by businesses with five or fewer employees, and electricity purchased for qualified industrial use are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(i) and (qq)
Estimate:  $280.0

3.402 Exemption for Fuel Used for Heating Purposes
Residential heating fuel, heating fuel purchased by businesses with five or fewer employees, and heating fuel purchased for qualified industrial use are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(j) and (qq)
Estimate:  $57.0

3.403 Exemption for Piped and Bottled Gas
Residential gas, gas purchased by businesses with five or fewer employees, and gas purchased for qualified industrial use are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(i) and (qq)
Estimate:  $153.8

3.404 Exemption for Steam
Residential steam, steam purchased by businesses with five or fewer employees, and steam purchased for qualified industrial use are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(i) and (qq)
Estimate:  $11.5

3.405 Exemption for Certain Energy Conservation Equipment
Equipment for a solar, wind or heat pump system used as a primary or auxiliary energy source in a principal residence is exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(dd)
Estimate:  N.A.

3.406 Exemption for Funeral Items
Coffins, caskets, and other funeral items are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(n)
Estimate:  $9.6

3.407 Exemption for a Motor Vehicle for a Paraplegic
A motor vehicle owned and registered for the personal use of a paraplegic is exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(u)
Estimate:  $1.0

3.408 Exemption for Textbooks
Textbooks and other books required for instruction in educational institutions are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(m)
Estimate:  $17.0

3.409 Exemption for Books Used for Religious Worship
Bibles, prayer books and other books used for religious worship are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(m)
Estimate:  N.A.

3.410 Exemption for Containers
Most containers are exempt from sales tax. These include sales of empty returnable and non-returnable containers to be filled and resold, containers the contents of which are exempt from the sales tax, and returnable containers when sold with the contents or resold for refilling.

Origin:  M.G.L. c. 64H, S. 6(q)
Estimate:  $121.2

3.411 Exemption for Certain Sales by Typographers, Compositors, Color Separators
Sales by typographers, compositors or color separators of composed type, film positives and negatives and reproduction proofs, or transfers of such items to a printer, publisher, or manufacturer of folding boxes for use in printing, are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(gg)
Estimate:  N.A.

3.412 Exemption for Sales of Building Materials and Supplies to be Used in Connection with Certain Construction Contracts
Materials and supplies used in connection with construction contracts with the United States and the Commonwealth of Massachusetts, or any of its subdivisions are tax exempt where the construction is for public purposes. Materials and supplies used in connection with construction contracts with a tax-exempt organization are tax exempt where the construction is to be used exclusively in carrying out the organization's charitable purpose. The exemption includes rentals of equipment as well.

Origin:  M.G.L. c. 64H, S. 6(f)
Estimate:  $153.4

3.417 Exemption for Commuter Boats
Vessels, materials, tools, repair and spare parts used exclusively to provide scheduled commuter passenger service are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(pp)
Estimate:  N.A.

3.418 Exemption for Fuels, Supplies and Repairs for Vessels Engaged in Interstate or Foreign Commerce
Fuels, supplies and repairs for vessels engaged in interstate or foreign commerce are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(o)
Estimate:  $0.5

3.419 Exemption for Fuel Used in Operating Aircraft and Railroads
Fuel used in operating aircraft and railroads is exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(j)
Estimate:  $31.8

3.420 Exemption for Sales of Certain New or Used Buses
New and used buses that provide scheduled intra-city local service and are used by common carriers certified by the Department of Telecommunications and Energy are exempt from sales tax. The exemption includes replacement parts, materials and tools used to maintain or repair these buses.

Origin:  M.G.L. c. 64H, S. 6(aa)
Estimate:  N.A.

3.421 Exemption for Films
Motion picture films for commercial exhibition are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(m)
Estimate:  N.A.

3.422 Exemption for Telephone Services
Sales of residential telecommunications services of up to $30 per month are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(i)
Estimate:  $44.6

3.500 EXEMPT NOT TAXABLE AS TANGIBLE PERSONAL PROPERTY
 
3.501 Nontaxation of Transfers of Real Property
Real estate is exempt from sales tax but is subject to a deeds excise at a rate of 0.456% of the taxable price of the property (0.342% in Barnstable County). The estimate represents revenues that would be collected under the sales tax if sales of real property were taxed at 5%.

Origin:  General exclusion of real property transactions
Estimate:  $2,706.4

3.502 Nontaxation of Rentals of Real Property
Rental charges for real property, whether for residential or business purposes, are exempt from sales tax.

Origin:  General exclusion of real property transactions
Estimate:  $1,028.2

3.503 Nontaxation of Certain Services
Certain services are not subject to sales tax. This estimate includes a range of services to individuals and businesses which are excluded from taxation by their omission from the statutory definition of services.

Origin:  M.G.L. c. 64H S. 1
Estimate:  $6,998.7

3.504 Nontaxation of Internet Access and Related Services
Internet access services, electronic mail services, electronic bulletin board services, web hosting services or similar on-line computer services are not subject to the sales and use tax.

Origin:  M.G.L. c. 64H S. 1
Estimate:  $97.9

3.600 MISCELLANEOUS EXEMPTIONS
 
3.601 Exemption for Casual or Isolated Sales
Casual or isolated sales (sales by private parties) are exempt from sales tax, except casual sales of motor vehicles, trailers, and boats. Sales of these listed items are exempt only when they are between family members.

Origin:  M.G.L. c. 64H, S. 6(c) and M.G.L. c. 64I, S. 7(b)
Estimate:  N.A.

3.602 Exemption for Vending Machine Sales
Vending machine sales of ten cents or less are exempt from sales tax. In addition, sales through vending machines, which exclusively sell snacks and candy with a sales price of less than one dollar, are exempt from the sales tax on meals.

Origin:  M.G.L. c. 64H, S. 6(h) and (t)
Estimate:  N.A.

3.603 Exemption for Certain Meals
Meals prepared by churches and hospitals, meals provided to organizations for the elderly, and meals provided by educational institutions are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(cc)
Estimate:  $10.3

3.604 Exemption for Certain Bed and Breakfast Establishments from Sales Tax on Meals and Room Occupancy Excise
Owner-occupied one-, two-, and three-bedroom bed and breakfast establishments are exempt from both the sales tax on meals and the room occupancy excise.

Origin:  M.G.L. c. 64G, S. 1, 2, 3, 3A and 6, and M.G.L. c. 64H, S. 6(h)
Estimate:  N.A.

3.605 Exemption for Certain Summer Camps from Sales Tax on Meals and Room Occupancy Excise
An exemption from both the sales tax on meals and the room occupancy excise is provided for summer camps for children age 18 and under, or for summer camps for developmentally disabled individuals. Camps that satisfy the above criteria but offer their facilities during the off-season to individuals 60 years of age or over for 30 days or less in any calendar year will not lose their exemption.

Origin:  M.G.L. c. 64G, S. 2 and M.G.L. c. 64H, S. 6(cc)
Estimate:  $1.3

3.606 Exemption for Trade-in Allowances for Motor Vehicles and Trailers
In most cases, motor vehicles and trailers bought in a trade-in transaction are only subject to sales tax on the excess of the purchase price over the amount credited for the trade-in.

Origin:  M.G.L c. 64H, S. 26, c. 64I, S. 27
Estimate:  $86.1

3.607 Exemption for Publications of Tax-Exempt Organizations
The publications of tax-exempt organizations are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(m)
Estimate:  $7.8

3.608 Exemption for Gifts of Scientific Equipment
Gifts of scientific equipment or apparatus by manufacturers to non-profit educational institutions or to the Massachusetts Technology Park Corporation are exempt from sales tax.

Origin:  M.G.L. c. 64H, S. 6(jj)
Estimate:  N.A.

3.609 Exemption for Vessels or Barges of 50 Tons or Over
Vessels or barges weighing 50 tons or more are exempt from sales tax when constructed in-state and sold by the builder.

Origin:  M.G.L. c. 64H, S. 6(o)
Estimate:  N.A.

3.610 Exemption for Rental Charges for Refuse Containers
Rental charges in connection with service contracts by and between waste service firms and customers for refuse containers or bins are exempt from sales tax when the containers are placed on the customer's premises by waste service firms.

Origin:  M.G.L. c. 64H, S. 6(ii)
Estimate:  N.A.

3.611 Exemption for Honor Trays
Food items purchased from honor trays are exempt from sales and meals taxes, provided that no item on the honor tray is sold for $1 or more.

Origin:  M.G.L. c. 64H, S. 6(h)
Estimate:  N.A.


KEY:                    ORIGIN
                    M.G.L.                    Massachusetts General Laws
                    ESTIMATES
                    All estimates are in $ millions.

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