Appendix D Non-Tax Expenditure Budget Items
In July 2012 legislation was enacted stating explicitly that “sales that do not involve tangible personal property shall not result in tax expenditures”. See St 2012, c.165, §112. Pursuant to this legislation, from fiscal year 2014 on, we remove some items from our tax expenditure estimates, which we regularly reported in prior years. But to facilitate comparison to tax expenditure estimates in prior years, we list these items in this appendix.
Items:
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 6% of the rental price (6.5% in the city of Boston). A Convention Center financing fee of 2.75% is also included in certain areas. Origin: General exclusion of real property transactions Estimate: $318.2 Comment: Revenues collected under the budgeted state room occupancy excise were $186.2 million in Fiscal Year 2022 and $235.7 million in Fiscal Year 2023. Beginning July 1, 2019, the room occupancy excise also applies to short-term rentals of property for 31 days or less. | |
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, § 6(i) Estimate: $17.5 | ||
Comment: Telegraph services are also exempt but are not included in this estimate. |
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 6.25%. | |
Origin: General exclusion of real property transactions Estimate: $5,209.2 Comment: Revenues collected under the Deeds Excise Tax (including Secretary State Deeds) were $472.3 million in Fiscal Year 2022 and $336.9 million in Fiscal Year 2023.
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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: $2,264.6 Comment: This estimate excludes rentals of hotel/motel rooms, which are separately stated under item 3.203. | |
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 § 1 Estimate: $24,343.1 | |
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 § 1 Estimate: $225.7 |
Description of Item | Former TEB number | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
Exemption for Hotel/Motel Rooms | 3.203 | 97.3 | 204.2 | 258.4 | 283.6 | 318.2 |
Exemption for Telephone Services | 3.422 | 21.2 | 18.3 | 17.4 | 17.4 | 17.5 |
Nontaxation of Transfers of Real Property | 3.501 | 5,917.7 | 7,037.7 | 5,018.9 | 5,016.7 | 5,209.2 |
Nontaxation of Rentals of Real Property | 3.502 | 2,024.9 | 2,068.2 | 2,138.4 | 2,201.1 | 2,264.6 |
Nontaxation of Certain Services | 3.503 | 18,375.4 | 18,761.0 | 20,681.4 | 22,458.4 | 24,343.1 |
Nontaxation of Internet Access and Related Services | 3.504 | 199.0 | 208.5 | 215.3 | 221.7 | 225.7 |