AUGUSTA — A measure that would delay implementation of the tax-reform law to next January awaits final action in the Senate after votes taken on Tuesday.
State Rep. Emily Cain, D-Orono, House chairwoman of the Appropriations Committee, sponsored the bill to prevent a potential $50 million budget shortfall next summer, if the people’s veto effort on the tax-reform law fails.
The tax law, passed last year, would reduce the income taxes paid by most Mainers from 8.5 percent to 6.5 percent. But the measure was crafted to be revenue-neutral. Most of the income-tax reduction would be paid for by expanding the state’s 5 percent sales tax to previously untaxed items and by increasing the meals and lodging tax from 7 percent to 8.5 percent.
A successful petition drive last summer for a vote to repeal the law was successful, which means implementation has been suspended until voters have their say in statewide balloting on June 8.
If Mainers choose to keep the law, the calculations for tax collections and relief will be out of whack. Mainers would be eligible for the reduced income tax, but the state would only have the chance to collect the new revenue for about half the year.
Lawmakers are constitutionally barred from substantively changing laws up for repeal. But Maine Attorney General Janet Mills said the proposal to change the effective dates would be consistent with the intent and substance of the law and therefore would be constitutional, in her opinion.