This proposed law would change the state income tax rate, affect language contained in certain tax provisions, and regulate the setting of fees by state agencies and authorities.

The proposed law would set the state income tax rate on Part B taxable income (in general, earned income) at 4.25% for 1991 and 4.625% for 1992, except for income from unemployment compensation, alimony, Massachusetts bank interest, rental income, pension and annuity income, and IRA/Keogh deductions, which would be taxed at 5%.

The proposed law also provides that the fee imposed by any state agency or authority shall be no more than the fee that was in effect on or before June 30, 1988. The state Secretary of Administration would determine the amount to be charged for any service, registration, regulation, license, fee, permit or other public function, except for the rates of tuition or fees at state colleges and universities or any fees or charges relative to the administration and operation of the state courts. Any increase or decrease in a fee, or the establishment of any new fee, would require the approval of the Legislature. Any increase in a fee would not apply to persons 65 years of age or older. No state agency or authority could collect any fee which exceeds the administrative costs directly incurred by the state agency or authority to produce and process the application for any license or permit. The Secretary of Administration must report information concerning fees to the Legislature on an annual basis.

The proposed law provides that for tax periods commencing on or after January 1, 1991, language in certain provisions of the Massachusetts general laws relating to taxes shall be the same as it was on August 2, 1989, or the effective date of the proposed law, whichever language yields less tax revenue. The tax provisions affected include sections relating to the surtax on business income, corporate excise taxes, S corporation taxes, taxes on security corporations, taxes on Part A income (in general, unearned income), bank taxes, excise taxes on alcoholic beverages and cigarettes, excise taxes on deeds, estate taxes, payments to the Commonwealth relating to horse and dog racing, payments to the Commonwealth relating to boxing and sparring matches, taxes on utility companies, gasoline taxes, taxes on insurance companies, excise taxes on motor vehicles, taxes on urban redevelopment corporations, sales tax, use tax, room occupancy excise tax, property taxes, and taxes on proceeds from raffles and bazaars.

The proposed law also contains a provision that if any sections of the law are held to be invalid, all other sections of the law are to remain in effect.