Mainers vote to repeal new tax-reform law

PORTLAND, Maine (AP) — Tax-weary Mainers on Tuesday rejected a new tax reform law that would have lowered the state's income tax rates while placing new taxes on dozens of purchases ranging from car repairs and amusement park admissions to movie tickets and dry cleaning.

The law, which was passed by lawmakers last year but has not gone into effect, would have lowered Maine's top income tax rate from 8.5 percent to 6.5 percent. To make up the difference, the law would have broadened the existing 5 percent sales tax to a laundry list of items that are now exempt. It also would have hiked the food and lodging tax, from 7 to 8.5 percent.

Mainers favored the repeal by a 60-40 margin as numbers were counted late Tuesday.

Supporters of the law said nearly 90 percent of Mainers would have seen their combined income and sales tax payments drop because out-of-state visitors would have paid more of the sales taxes. But opponents said it amounted to new taxes on everyday purchases that would be felt by every Mainer.

Mainers voted against the tax law after they realized how complicated it was and how many purchases would be subject to sales taxes that are currently exempt, said Curtis Picard, executive director of the Maine Merchants Association, which supported repealing the law.

"I think there is a need for tax reform in Maine," Picard said. "But all this law did was pit Mainer vs. Mainer and create winners and losers, and that wasn't a good situation. We need tax reform that's fair for everybody."

Crystal Canney, spokeswoman for the political action committee that supported keeping the law in place, said the election was a missed opportunity for Maine.

"Tax reform is an issue this state needs to deal with," she said. "But we respect the will of the people."

The law, described as the most sweeping change in Maine's tax code since income taxes were adopted in 1969, was designed to be revenue-neutral, but Maine Revenue Services projected it would result in tax savings of $54.3 million for Mainers in 2011 because out-of-state visitors would pay more at restaurants and hotels, for car rentals and for other purchases in Maine.

If the law had been retained, the average Maine family in 2011 would have paid less in income taxes but more in sales taxes — for a combined savings of $77, the agency said.

At a Portland polling place Tuesday, Toby Hollander said he trusted that lawmakers chose the best option in passing the tax overhaul.

"I think the general idea of spreading out the sales tax so that we're not totally dependent just on things that are subject to the recession is a good idea. We've been going through this for years and years and years. This is something that needed to be done a long time ago," said Hollander, who is a guardian for children in the court system.

Linda Cooledge, a lifelong Portland resident who said she's considering moving to Florida because of Maine's high tax burden, voted against the tax law because she didn't want to see taxes expanded to new goods and services.

"Once they've got their hands in our pocket for these little taxes on everything, now they've got the go-ahead to add to it every year. Once the government and the state of Maine has their hand in your pocket, they keep dipping further and further," she said.

Soon after the law was passed, a coalition to repeal the tax law collected more than 60,000 signatures to force a statewide vote.

Maine's business community split over the measure. The Maine State Chamber of Commerce and the Portland Regional Chamber supported keeping the law, but the Maine Merchants Association, the Maine Restaurant Association and other business organizations opposed it.

___

Associated Press writer David Sharp in Portland contributed to this report.

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Comments

 's picture

voting...

Can someone tell me why as a a registered independent* voter that I have to change partys to vote on issues aside from the Governors race. I can name 20 people off the top of my head that I know of who didn't get to vote on issues unless they changed parties.

JONATHAN ALBRECHT's picture

Proves once again that Republicans are hypocrits

Republicans just defeated lower taxes and a better business climate proving once again that they will sacrifice the interests of the people of Maine for their special interest groups so nicely provided by Govt2big. Please do call them and thank them for higher taxes and no economic growth.

 's picture

taxes back up?

Matt, This argument the we should repeal this tax package because they (government) might raise the income tax up again in the future is ridiculous. Deal with that problem when the time comes, if it does. This is the pinnacle of fear politics, lets not approve this law because of what laws may come in the future. I respect if you are against this tax reform package on other merits or issues, but this one argument drives me crazy.

 's picture

yeah, thanks

Thanks to all the people who voted yes, because that extra money in my paycheck would have really sucked. And yeah, thanks to all those business organizations listed above that only care about their bottom line. Nice of them to ignore the fact that their employees could have gotten more money in their paychecks.

RONALD RIML's picture

The Power of Propaganda

is proven again.....

RAYMOND FRECHETTE's picture

Certainly the vote in

Certainly the vote in November will be a further test of the will of the citizens of Maine to fight the entranched bureaucracy who continually wants to tax citizens to death. A vote for Mr. Lepage would send a clear statement to Augusta that Maine citizens havee had enough of high taxes. A vote for Ms. Libby, on the other hand, would be a clear signal that the voters want to continue the tradition of higher taxes for Mainers. It is gratifying to see that Mainers rejected the claims of proponents of this change and saw through their claims.

 's picture

We owe a large Thank You to many groups

In light of last night’s victory for Maine taxpayers,
please make sure you contact some of the folks involved to say Thank you!”
The Vote Yes to Reject Coalition (http://voteyestoreject.com) includes:
Maine Merchants Association;
Maine Restaurant Association;
Maine Innkeepers Association;
Maine Tourism Association;
National Federation of Independent Business;
Maine Grocers Association;
Maine Professional Guides Association;
Maine Campground Owners Association;
New England Car Wash Association;
Maine Auto Service Professionals;
Bar Harbor Chamber of Commerce;
Old Orchard Beach Chamber of Commerce;
Maine Automobile Dealers Association;
Dry Cleaning and Laundry Institute;
New England Fabricare Association;
Coin Laundry Association;
Union Chamber of Commerce;
Caribou Chamber of Commerce;
ABC of Maine;
Maine Motor Transport Association;
Maine Association of Realtors;
Maine Snowmobile Association;
York Region Chamber of Commerce.

In addition, let’s not forget the great people at www.MaineTaxpayers.com, www.MaineRefounders.com, www.MainePatriots.com and www.AsMaineGoes.com ...
BUT MOST IMPORTANTLY … Senator David Trahan, for leading this fight against higher taxes for Maine residents.

In addition; please remember in November that Paul LePage was also a HUGE supporter for this ‘Vote YES on 1’ effort while Libby “status quo” Mitchell supported the other pro-tax side.

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