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The Massachusetts Senate voted last night to increase the sales tax, lift the sales tax exemption on alcohol, and allow cities and towns to raise meals and hotel taxes, brushing aside criticism that higher taxes would hurt Massachusetts businesses by driving consumers over the border, particularly to tax-free New Hampshire.

The Senate plan, which cleared the House in April, would push the sales tax from 5 percent to 6.25 percent, while generating an estimated $633 million to offset deep cuts in services for the poor, elderly, and disabled.

Lifting the sales tax exemption on alcohol sold at package stores would raise another $80 million for those services, senators said. Allowing cities and towns to impose a 2 percentage point increase in taxes on hotels and restaurant meals will help offset cuts in state aid to municipalities, senators said.

At 6.25 percent, Massachusetts would have the second highest sales tax rate of the six New England states plus New York. Only eight states nationwide have a higher rate.

Governor Deval Patrick has threatened to veto any broad-based tax increases, unless the Legislature also overhauls the state transportation agencies, pension system, and ethics laws.

His aides were not available for comment last night, but his threat carries little weight because of the vote tallies.

The Senate voted 29-10 in favor of the sales tax increase, joining the House in mustering a veto-proof majority. Senate President Therese Murray described the sales tax increase as the least punitive of tax options needed to restore services for the most vulnerable.

“I think this is probably the more fair way to go if we have to raise revenue and, unfortunately, we have to raise revenue,” she told reporters after the vote. She said that although the budget’s proposed cuts will not be completely reversed, there will at least be “some money put back into those programs.”

Money from the sales tax increase, senators said, would be spent on a multitude of services. Among them: $4 million for summer jobs for at-risk youth, $5 million for workforce training, $6 million for regional tourist councils, $36 million for special education, and $10 million for rental housing assistance to enable 1,700 families to stay in their homes.

Senator Gale D. Candaras, a Wilbraham Democrat, seemed to speak for the Democratic majority when she declared on the floor that there was “absolutely no good card in the hand,” when it came to raising taxes.

Still, she said, “this sales tax will fund a lot of very important programs, at least in part for some of the most vulnerable citizens.”

Opponents warned that a higher sales tax would hurt the state’s ability to recover from the recession.

“Maybe we should call this the New Hampshire economic stimulus bill,” Senator Robert L. Hedlund, a Weymouth Republican, said with sarcasm.

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Massachusetts Transportation Secretary James Aloisi says the reality of the fiscal crisis facing Massachusetts finally pushed him and Governor Patrick to propose the gas tax. He says, “We’ve got coming, a $165 million operating deficit at the T, which will happen on July 1. If we don’t solve that problem, we’ll have T fare hikes, service cuts, and layoffs. And we’ve got a Turnpike that is very close to having junk bond status.”

Aloisi says Governor Patrick will veto the gas tax hike if it is adopted without Deval’s proposed reforms of transportation agencies. He says that tolls will have to be raised if the gas tax is not approved by the March deadline set by Turnpike Authority lenders.

Massachusetts Governor Deval Patrick delivered his long-awaited decision last Friday. Despite rejecting the idea during his campaign, he proposed a 19-cent a gallon increase in gas taxes.

The number one cheerleader for the gas tax joins Jim Braude on this segment of Newsnight.

Last month, James Aloisi was named Secretary of Transportation. During the Dukakis and early Weld administration, he served at counsel to the Massachusetts Turnpike Authority.

For more information on Governor Patrick’s transportation reform plan CLICK HERE.