MA FY20 State Budget:

Marketplace Sales Tax, Preliminary Sales Tax Remittance Changes, EMAC

By the end of May, the MA House of Representatives and the state Senate had both had a turn to debate the proposed FY20 state budget.  Each branch enacted their own version of the budget, putting their signature stamp on what priorities and programs should be funded in our next $42 billion plus spending plan.  A Conference Committee of three representatives and three senators will now meet privately to negotiate a compromise budget bill with the goal of trying to deliver a final plan to the Governor in mid to late June, prior to the start of the new fiscal year on July 1.

RAM was successful in advocating for the inclusion of new marketplace sales tax collection language first in the Governor’s budget proposal (H.1), and then securing passage in both the House and the Senate.  The proposed law would require marketplace facilitators (i.e., Amazon, E-Bay, Etsy, etc.) to collect and remit the state’s 6.25% sales tax on all of the transactions that take place on their platforms, including all sales made by third party marketplace sellers.  The language closely resembles the bill language which RAM had drafted earlier this session and which was filed by Sen. Michael Rodrigues of Westport.

This important step to update the Commonwealth’s sales tax collection laws is in line with similar actions being taken across the country in the wake of the Wayfair decision, and will bring us closer to true marketplace and sales tax fairness between all sellers.  The budget proposals also include RAM supported language to establish a lower sales threshold that would trigger an out-of-state remote seller's obligation to collect and remit the MA sales tax.  The proposed threshold of $100,000 in remote sales into the Commonwealth also would fall in line with what was referenced in the Wayfair decision. 

Also, as previously reported, in H.1 Governor Baker had proposed changes to the state’s sales and meals tax collection and remittance process.  The vague language would have allowed the Department of Revenue (DOR) to, by regulation, mandate a “preliminary remittance of sales tax” be made to the Commonwealth by thousands of retailers and restaurants.  RAM strongly opposed those provisions to make changes in the current sales tax remittance process, and expressed our extreme concern to both the House and Senate.  RAM lobbying on this issue paid off in that the proposal was not included in either the House nor the Senate budget.

With regard to the Employer Medical Assistance Contribution (EMAC) Supplement, we can report that no attempt has been made by the Baker Administration, the House, or the Senate to extend or replace the expiring $750 per employee penalty.  The law which put the EMAC tax in place in August of 2017, called for a temporary two-year tax increase for 2018 and 2019.  Employers with employees on public health assistance, MassHealth or ConnectorCare, have paid and are paying an additional EMAC Supplement of up to $750 per employee, annually.  RAM’s top priority has been to ensure that the sunset of the program on December 31, 2019, is in fact honored by the state.  To date, the Administration, House and Senate have stood firm on the repeal date, and have not moved to introduce any extension or replacement program.  

RAM Testifies Against Restrictive Scheduling Mandate

In April, RAM testified in opposition to two predictive scheduling bills before the Labor and Workforce Development Committee.  The lead bill (S.1110) is a re-file from prior sessions and seeks to impose strict employee scheduling requirements on retail, hospitality and food service employers with more than 50 employees.  Modeled after the San Francisco Retail Workers’ Bill of Rights, the proposal would require that employers provide 14 days advanced written notice of an employee’s work schedule and make penalty payments for employer-initiated changes made thereafter.  The proposal also includes “Right to Rest” and “Offer to Work” provisions and allows for significant penalties for non-compliance with the law. 

A similar measure had also been introduced as a proposed ordinance in the City of Boston by Boston City Councilor Michelle Wu in October 2018.  Limited in scope, the Boston proposal would only apply to businesses contracting with the city.  RAM is actively engaged in discussions with the Council as they further explore the issue this year.    

Statewide Plastic Bag Ban/Tax Discussions

In the wake of the implementation of the City of Boston’s plastic bag ban and mandatory $0.05 fee, which took effect in December of 2018, pressure has increased considerably for passage of a statewide law.  As of May, local bag ordinances are either in effect of have passed in one form or another in over 110 municipalities across the Commonwealth.  Adoption of a statewide law is now needed to provide uniformity – provided certain important protections are put in place.  

The Joint Committee on Environment, Natural Resources and Agriculture recently held a public hearing on legislation which calls for a complete ban on all single-use plastic check out bags provided to a consumer at the point of sale, allowing only for paper or reusable bags to be offered.  The discussion has moved away from allowing for any thicker plastic bags to be considered reusable, regardless of mil thickness.  Only polypropylene or similar commonly seen reusable bags would be considered to be “reusable.”  Whether or not to mandate a fee on bags like Boston and Cambridge, or to just go with a straight ban has become the main topic of debate.

RAM has engaged in meetings and discussions with both the Legislature and the environmental advocates to try and reach a compromise on a statewide bill.  We surveyed our members earlier this year to better understand the varying opinions in the RAM membership.  As expected, opinions varied greatly, but mainly fell along lines with regard to the type and size of seller.

In a proposed agreement to a ban on plastic and a minimum mandatory fee on paper and reusable bags, RAM is seeking a waiver from the mandatory fee for smaller sellers and low volume bag users – as yet undefined.  We are also seeking strong preemption over past and potential future municipal actions, so that the statewide law will remain just that, the statewide standard.  The discussions with the Committee and the environmental advocates are ongoing.