This November, Massachusetts residents will vote to clear for once and for all their state’s reputation as “Taxachusetts.” A libertarian advocacy group has placed a ballot question in front of voters which would repeal the state income tax.

The measure, sponsored by the Committee for Small Government, would reduce the current state income tax rate of 5.3% to 2.65% beginning on January 1, 2009, and eliminate it completely the following year.

Taxpayers would save an average of $3,600 a year, at a cost of roughly $12.5 billion, or 40 percent, of the state budget.

While government officials argue that the initiative would decimate government projects ranging from Massachusetts’ one-of-a-kind universal health care plan to infrastructure repairs, proponents see the initiative as an opportunity to expose and eliminate wasteful government spending.

“These are the usual ‘sky-is-falling’ claim from our opponents, who like to pick the most popular programs and threaten to cut them, while ignoring government waste...and the thousands of subcontracters that are unaccountable and unscrutinized by the taxpayer,” said Carla A. Howell, president of the small government group.

Asked to cite specific wasteful items, Howell described “exorbitant government pensions and fake reform of police detail” as only “the tip of the trash heap.”

“Governor Patrick pretends to have finally addressed this egregious waste, but it remains wasteful, almost as wasteful as before,” said Howell. “This measure doesn’t even begin to root out the government waste in city and town spending.”

Yet legislators argue that the initiative will affect the aid the state can give to local communities.

“One would find it hard to believe that they would be able to lose 40 percent of revenue stream and not have to reduce state aid to local cities and towns,” said Cambridge Budget Director David J. Kale.

State senator Anthony D. Galluccio, a former Cambridge city councillor, expressed similar concerns.

“The initiative would have a dramatic impact on local services,” said Galluccio. “If the city gets far less local aid, they will have to make cuts, and they will not want to have the entire impact be on local residential property taxes. Trash collection fees, snow removal, street cleaning, public safety, fire safety, education could all be affected.”

Both Galluccio and Kale, as well as city councillor Sam Seidel, discussed the possibility of communities being forced to increase property taxes to ensure that local programs remain solvent.

“I have no doubt that we would look at [hiking property taxes], I don’t know if we would do it or not,” said Seidel. “The credit freeze on Wall Street along with Question 1 don’t paint a very pretty picture going into the future.”

—Staff writer Peter F. Zhu can be reached at pzhu@fas.harvard.edu.