BOSTON — Gov. Deval Patrick will propose hiking the Massachusetts cigarette tax by 50 cents per pack as part of a plan to raise $260 million in new revenues for the state budget, the administration said Friday.
The governor's plan also seeks to impose the state's 6.25 percent sales tax on candy and soda — both items are currently exempt from the tax — and expand the state's bottle deposit law to include bottled water, sports drinks and other beverages.
In addition to increasing the cigarette tax from $2.51 per pack to $3.01 per pack, a 20 percent increase, the plan would double the taxes paid on other tobacco products such as cigars and smokeless tobacco. The tobacco tax hike was expected to raise $73 million, officials said, with the money earmarked to help offset the cost of a recent decision by the state's highest court that cleared the way for thousands of legal immigrants to join Commonwealth Care, the state's subsidized health insurance program.
Patrick was scheduled to unveil his proposed state budget for the fiscal year starting July 1 on Wednesday. While the state is anticipating a 4.5 percent increase in total revenues in the next fiscal year, budget officials have warned that most, if not all of the additional money flowing into state coffers will be swallowed up by rising health care expenses and other fixed costs.
Along with boosting revenues, administration officials said higher taxes on tobacco and junk food might also help make people healthier.
"These revenue proposals will discourage public consumption of unhealthy products that increase public health costs and will fund public health investments that will help save money in the statewide health system and help all residents attain healthier lifestyles," the office of Administration and Finance said in a statement detailing the revenue initiatives.
Anti-smoking groups applauded the proposed hike in the cigarette tax. The last time the tax was increased in Massachusetts was in 2008, when it jumped $1 to $2.51 per pack.
Lifting the sales tax exemption for candy and soda was expected to generate $61.5 million, with the bulk of the revenue going to public health programs, the administration said.
The proposed expansion of the bottle redemption law was expected to raise $22 million, with a portion going to fund new recycling initiatives.
The candy and soda tax and the broadening of the deposit law were also offered by the governor in last year's budget proposal, but were not adopted by the Legislature.
David Sullivan, general counsel for administration and finance, said legislative leaders were briefed Friday on the new revenue proposals. During a speech earlier in the day to the Massachusetts Municipal Association, House Speaker Robert DeLeo predicted "a very, very tough year fiscally in the Commonwealth," despite the improving economy.
State Rep. Bradley Jones, the House Republican leader, said the proposal to tax candy and soda shows Patrick "has a sweet tooth for tax increases." He also said the proposed cigarette tax hike would only serve to help neighboring New Hampshire when Massachusetts smokers cross the border to avoid higher taxes.
"Raising taxes is not the fiscally or economically responsible approach," Jones said.
Michael Widmer, president of the independent Massachusetts Taxpayers Foundation, noted that lawmakers had previously rejected some of the governor's revenue proposals and questioned whether they would be more willing to accept them this around.
"The Legislature always puts its own imprint on the budget, but this year they are facing the same limited options the governor faces," Widmer said.
The administration has promised significant spending cuts in its budget, but has not yet outlined what those might entail. Sullivan said Friday the state would also borrow money from its so-called "Rainy Day" fund to help balance the budget, but he would not say how much.
Lt. Gov. Timothy Murray told the gathering of municipal officials that the spending plan would call for the same amount of unrestricted local aid to cities and towns that was included in the current year's budget, but would increase that amount by $65 million if the state finishes this year with a surplus, as it did last year.
Patrick also planned to offer a series of proposals to eliminate corporate tax deductions and loopholes. One would delay a scheduled corporate excise tax deduction enjoyed by some large, multinational corporations, saving the state $46 million.
The state is also seeking to collect $7 million in room occupancy taxes from the markup on hotel rooms by travel websites, the administration said. Another $7 million could be raised by closing a loophole that allows non-insurance subsidiaries of insurance companies to be taxed at the same lower rate as their parent firms.
Officials also hoped to generate $5 million by selling advertising on some state government websites, and about $22 million by using technology enhancements to improve tax collections.