It’s wrong to force local communities to pay the price of tax relief for businesses.
A recent opinion piece in this paper by the Maine Chamber of Commerce spent a lot of time arguing for the need to eliminate the property tax on business equipment and critiquing opponents of the current proposal that provides the businesses’ tax break.
However, the Chamber spent no time explaining three related and important issues. First, the Chamber only hints at the fact that Maine businesses have a tax relief program now. In fact, businesses have been reimbursed for the property taxes paid on new investments in equipment for a decade. In 1995, the state began its Business Equipment Tax Reimbursement program. As the name implies, BETR reimburses businesses for the property tax that they have paid on all new and replacement equipment. The businesses are reimbursed for their property tax obligations by Maine’s income taxpayers.
There is no need to debate the benefit of reducing the tax burden on Maine businesses by eliminating the impact of property taxes on new investments. That debate was settled 10 years ago with the creation of the BETR program, which effectively eliminated the tax. All of the Chamber’s rhetoric about jobs is an effort to distract from the real issue.
By failing to explain the full BETR program, the Chamber hid the true policy dispute regarding LD 2056. The real issue is who will pay for the businesses’ exemption. Currently the state does; LD 2056 forces local communities – local property taxpayers – to pay. The real winner from LD 2056 is not business, but the state. The state will reimburse local communities for lost tax revenue, but only at a fraction of the reimbursements they have been giving to businesses.
According to Maine Revenue Services, after 10 years LD 2056 will provide a windfall to the state (and a hit to local property taxpayers) of approximately $40 million per year.
Municipalities are concerned that the proposed bill not only shifts the costs from state resources onto local resources, but actually shifts the tax from businesses to homeowners. The Chamber congratulates legislative leaders and the governor for their courage in supporting this shift. It’s hard to see why it’s courageous for the state to slough off the effects of its decision to exempt personal property taxes onto our communities and your property tax bill.
Another issue ignored by the Chamber is that the current BETR program (and LD 2056) is much broader than most people think. Many agree with exempting property taxes for new investments in businesses that could locate elsewhere. However, most would not support the tax exemption created by LD 2056 for national chain stores like McDonalds and Exxon- Mobil.
A third issue hidden by the Chamber is the fact that municipalities expressed support for a more targeted but permanent repeal of the personal property tax this year.
Earlier in the year, the governor asked municipalities to work on a plan to repeal the personal property tax. The municipalities delivered just such a plan and even won plaudits from the Chamber when it was unveiled months ago. The plan focused the exemption to the industries and businesses that need it. The plan held local property taxpayers harmless, and prevented any windfall to the state. Finally, the plan included what Mainers want most of all: real government reform.
However, the Chamber quickly got in line when the governor and legislative leaders indicated they had no interest in pursuing a plan that involved real structural reform. They prefer the cut and run approach. The Chamber’s opinion piece stated that it didn’t want the public distracted from the real issue. Hopefully, now you won’t be.
Jolene Lovejoy is a selectman in Rumford.