In an editorial last month, the Sun Journal was shortsighted in recommending that Maine’s excise tax on motor vehicles – the highest rate in the nation at $24 per $1,000 – should be left alone, and that the legislation I am sponsoring, L.D. 345, “An Act to base the Excise Tax on Motor Vehicles on the Purchase Price,” be defeated.

In my campaigns for the state Senate, people frequently mentioned this tax as being out of line. It is based on the manufacturers’ suggested retail price rather than on the actual purchase price a person pays for a vehicle.

The shock hits a lot of people when they show up at their town office to register their new car and face a substantial excise tax that’s far more than they expected. This high rate continues for the first few years of ownership.

This constituent reaction led me to sponsor the bill. In an era of deep discounts and dealer incentives, the difference between the MSRP and the purchase price is often thousands of dollars. As a matter of fact, one of the bill’s co-sponsors reported that a constituent bought a program car for $15,900 and the excise tax was figured on the MSRP of $27,900.

It is noteworthy that several other legislators submitted legislation that would do the exact same thing as my bill, L.D. 345. When more than one legislator submits the same bill request to the Reviser’s Office (or a request that is very closely related), the first one to submit the idea becomes the “primary” sponsor of the legislation. Other legislators then become what is termed “mandatory” co-sponsors. In this instance, several other legislators felt strongly that this issue was of great importance to their constituents and submitted similar bill requests. They are now co-sponsors of the legislation.

In 2002, the Task Force to Study the Municipal Excise Tax and Other Motor Vehicle Registration Fees, headed by then Secretary of State Dan Gwadosky, conducted a thorough investigation of the excise tax in response to the increasing number of complaints. This group included representatives from all stakeholders, including the Maine Municipal Association, Maine Auto Dealers, Maine Motor Transport Association, AAA and state government, and concluded that Maine’s rate was too high.

The task force recommended that the Legislature move to lower Maine’s top rate, paid on new vehicles, from 2.4 percent to the national average of 1.8 percent. The report also found that excise taxes increased by 70 percent between 1990 and 1999. The excise tax goes directly to the municipalities, constituting 10 percent of the funds raised by cities and towns, and is not required to be spent on road construction and maintenance, as is often assumed. Many towns use excise tax funds for general operations or other non-road items, as well as for roads. A lowering of this tax would not cause roads to be ignored, as the Sun Journal’s editorial suggested.

The progressivity argument raised in the editorial has some merit in arguing that those who can afford a new car can also afford to pay the high excise tax. However, this needs to be reasonable, and I would like to see newer, more fuel-efficient cars affordable to the regular working people of Maine, and to minimize the extra, and often unanticipated costs, in the major purchase of a car.

For example, the individual purchasing the program car in my earlier example was faced with an extra $288 by using MSRP instead of the purchase price and will pay close to the top rate for the next few years. The extra cost hurts most working people’s budgets, especially if the purchasers are really stretching to get a newer car that might save them money in the long run through greater fuel efficiency and fewer repairs.

This bill can be amended, and the co-sponsors and I are open to a number of options that would achieve lowering the excise tax burden while not causing undue hardship for town officials in computing the tax, a concern expressed by the Maine Municipal Association.

Some options might be taking a percentage, such as 85 percent of the MSRP, lowering the top rate or increasing funds to the towns through revenue sharing.

My hope in sponsoring L.D. 345 is to adjust the excise tax in a way that is understandable and fair to our citizens and that is in line with Gov. Baldacci’s goal of lowering the overall tax burden in the state to be more in line with the national average.

State Sen. Bruce Bryant, a Democrat, represents Dixfield.

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