Eliminate municipal tax on new investments

0

As we enter the last days of the legislative session, the debate over exempting new business investments from municipal property taxes has become very contentious. That’s unfortunate, because LD 2056, An Act To Replace Municipal Revenues Subject to Business Equipment Property Tax Exemption – or BETR – is one of our best opportunities to improve Maine’s economic climate in the years ahead.

Here’s the thing to stay focused on: The debate is about jobs, for today and tomorrow.

Maine needs more good jobs. To get there, we need every company to invest in Maine. We all know that. And the best way to win investment in Maine is to pass this bill.

Republican and Democrat leaders support LD 2056 in the State House. So does Gov. John Baldacci. We thank them for their courage, especially in the face of attacks that have tried to change the debate away from jobs, and toward slower local government spending growth in the years ahead.

Opponents of this bill claim that the gradual phase out of municipal taxes on new investments would be devastating to local budgets and services. It’s just not true.

Here are some of the smokescreen arguments being used to get away from discussing the most important point – keeping good jobs in Maine, and attracting new ones:

• “Over a relatively short period of time, LD 2056 would eliminate 10 percent of the statewide municipal tax base…”

Not true. Because the bills allows towns to continue to tax the existing business equipment tax base and only affects revenue from equipment acquired after April 1, 2008, it will take 20 or more years for the exemption to phase in.

• “LD 2056 will benefit a few large companies and leave everybody else holding the bag.”

Wrong again. This bill will help large and small companies alike. Most businesses that currently seek tax relief through the BETR program are small businesses. About 75 percent of BETR recipients receive less than $10,000 in tax relief. About half receive less than $2,000. LD 2056 will benefit the same array of businesses that currently use BETR.

• “Even smaller municipalities that have no personal property will feel the impacts as their county taxes increase and school subsidy decreases.”

Another smokescreen. Any potential shift from LD 2056 relates to only about 3 percent of the tax base and would occur over 20-plus years. When considered in light of population and other trends, the potential shift created by LD 2056 is minuscule.

• “Thirty-eight states impose a tax on personal property and at least 33 states impose that tax in the same manner or more aggressively than Maine.”

Not from an investor’s perspective. While many states impose some form of personal property tax, virtually all of those states have various exemptions to the tax. For example, in our region, there is no tax on manufacturing equipment in New Hampshire, Massachusetts, Rhode Island, New Jersey, New York, Pennsylvania, Delaware, Vermont, Nova Scotia, New Brunswick, Prince Edward Island and Quebec.

Here’s the bottom line: In order for Maine to keep existing good jobs, and to attract new ones, the municipal tax on new investment has to go. Seven studies in five years have said the same thing: Get rid of the municipal tax on new investment. That’s the best way to improve Maine’s chances for better jobs. And that’s just what LD 2056 will do for every kind of business in Maine, from manufacturing to retail to services to technology companies, large and small, all across Maine.

This plan offers our whole state a chance for a better economic future. Don’t let scare tactics distract you from the real issue: It’s about jobs, for today and tomorrow.

Dana Connors is president of the Maine State Chamber of Commerce.

Advertisement
SHARE