AUGUSTA – Two groups that are advocates for the poor and working families are raising eyebrows about a proposal to tax groceries.

Under the comprehensive tax reform bill sponsored by Rep. Richard Woodbury of Yarmouth and Sen. Joseph Perry, D-Bangor, Maine’s overall sales tax would be lowered by taxing more things.

The biggest item – and one that would affect most families – would be groceries.

The sales tax would go from 5 to 4 percent, so a family that spends $100 a week on groceries would pay $104.

“I’m not in favor of taxing groceries,” said Tammy Greaton of the Maine People’s Alliance. “That really targets the regular people in this state.” She said: “If they want to do the snack tax, let’s go for it again,” but taxing groceries “is the wrong place.”

Greaton agreed that broadening Maine’s sales tax has to happen, but said buying food takes a much higher percentage of poor people’s incomes compared to others.

Christopher St. John of the Maine Center for Economic Policy said he’s “very concerned” about two key components of the bill: taxing groceries and a flat tax of 6 percent for income.

“We don’t have all the details yet, however, generally sales tax on food is extremely regressive,” St. John said. And one flat income tax of 6 percent could mean raising income tax for those paying 2 or 4 percent, and lowering taxes for those who pay 8.5 percent.

A study a few years ago showed that a flat income tax in Maine would raise taxes for a majority of Mainers, and lower taxes for a minority, “which is politically insane,” St. John said. “We don’t know if that’s the case with this bill. We don’t have all the details. However, the preliminary impressions are not good.”

In a statement on their tax package, Perry and Woodbury raise the question: Is it going too far to tax groceries, as well as energy fuels and sales to nonprofits?

Maybe it is, they said, but it’s a discussion the state should have.

In order to lower the sales tax and stabilize the state budget, “everything needs to be on the table,” Woodbury said, including food. Only through a massive broadening of the sales tax base can the state achieve not only lower taxes but an income that doesn’t dwindle when the economy turns sour, he said.

Gov. John Baldacci declined to offer a position on taxing groceries Tuesday, saying he has not yet had a chance to review the bill. He praised the comprehensive work by Perry and Woodbury, and said that in general he would not have a problem with something that is revenue-neutral.

Baldacci stressed he will reject any proposal that raises taxes, and that he’ll be unveiling his tax reform package on Friday. His would lower income taxes, the governor said.

One GOP leader said Republicans won’t be “dragged” into any tax reform agreement unless a bill is passed that requires a two-thirds supermajority for increasing any broad-based tax.

If Republicans don’t get that, “we’re simply not going to do it,” said House Minority Leader David Bowles, R-Sanford. “This is a trap for Republicans.”

While Maine may need comprehensive tax reform, “we’re not going to get dragged into a discussion of raising some taxes, lowering other taxes, if in the next Legislature they’re going to come back and increase the taxes they just lowered.”

What else is in the bill

• Lower the sales tax from 5 to 4 percent

• Tax movie, play and spectator sports tickets, sightseeing, golfing, skiing, skating, tanning salons, massage therapists, tattoo artists and body piercers.

• Tax funeral services, exercise and fitness centers, coal, oil, gas and water for homes, dating and personal introduction services, landscaping, data processing services, sales to nonprofits.

• Increase cigarette taxes from $1 to $1.50 a pack

• Increase restaurant tax to 8 percent; hotel tax 10 percent

• Increase tax on beer 50 cents per gallon and wine $1 per gallon

• Increase the earned income tax credit, raise exemptions to federal levels, and increase what families could earn (family of 4 could earn $28,700) before paying any state income taxes.


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