On Saturday, Governor Michael S. Dukakis signed a new tax cap bill which promises to cut taxes up to $250 million.

The Legistature Tax Cap Bill will immediatelly repeal the 7.5 percent income surtax at a cost of $135 million, restore the $2,200 personal exemption, reduce taxes for lower-income families and small businesses, and impose a cap on future taxes.

Dukakis' signing came after the House and Senate voted 125 to 22 and 25 to 7, respectively, for the bill on Thursday. "This law is basically what we wanted," said a Dukakis spokesman of the conference committee's compromise version.

But the members of Citizens For Limited Taxation (CLT) are not happy about the new law. "Their's [the Legislature's Tax Cap Bill] is nothing but a hoax to keep the people from voting for Question Three [the CLT's version of a tax cap] on the referendum," said Pat Warnick, a CLT spokesman.

"Ours is the only tax cap that will have any effect at all," she said, saying that the tax cap proposed by CLT would provide stability by setting a limit on annual tax revenue.

"In the low years, the government will be operating on a medium of the high years, so they will be able to maintain their services," she said. She said voting "No" to Question Three on the referendum would mean the government "could collect $1 billion extra and spend it any way they want."

The Dukakis spokesman said that the Legislature Tax Cap Bill is similar to the CLT tax cap, in that all revenues collected in excess of the cap would triger tax cuts.

Unlike the CLT proposed tax cap, however, the legislature cap cuts "sends the excess tax cuts back to the taxpayers fairly by increasing flat personal exemption 5 percent for everyone," she said.

The Dukakis spokesman added there are other significant differences between the two tax caps. She said the Legislature Tax Cap Bill provides $135 million more than the CLT tax cap by giving $100 million of "immediate additional tax release primarily to the middle-and lower-income group and to the elderly."

No-Tax Status

The Legislature Tax Cap Bill also increases the no-tax status from $6000 to $8000 for single taxpayers and from $10,000 to $12,000 for joint filers, she said. "The CLT version of the tax cap does nothing to correct the tax burden of the working poor," she said.

Francis J. Faulkner, associate director of CLT, called the Legislature Tax Cap Bill "a Halloween tax cap."

Faulkner called it ridiculous that under the new tax law, the Officer of the Comptroller would be appointed by the governor. "The provisions officer would be completely under the control of the governor, who is opposed to tax limits," Faulkner said.

"You need someone relatively independent of political influence," he said, emphasizing that under the CLT tax cap proposal, the comptroller would be elected by the people and thus would act independently.

Dukakis' spokesman said that if the people vote for CLT's tax cap proposal, the legislature "may take up the tax cut again."