AUGUSTA (AP) – Gov. John Baldacci is expected to weigh in on the modest end of the spectrum when lawmakers spread as many as 10 tax reform plans on the table over the next few days.
The governor has dropped the idea of including a local option sales tax provision from his own package, but still wants to eliminate a property tax on certain business equipment and machinery and restructure income tax rates, according to sources in the Baldacci administration and in the House and Senate.
Gubernatorial aides said Baldacci would welcome a review of local option by lawmakers.
Coming as the Legislature moves into what has been scheduled to be its last full month of the year, such an initiative might well be judged ambitious at this point in the session, particularly because lawmakers already went through strenuous exertion earlier this year to debate and ultimately enact a property tax relief measure that focused largely on school aid.
But the bold side of the upcoming Taxation Committee talks has already been taken by others including the panel’s two chairmen, who earlier this week laid out a proposal that would fix the state income tax at a flat 6 percent and lower the sales tax to 4 percent while broadly expanding it to include untaxed items including grocery staples, energy fuels and amusements.
The proposal by Sen. Joseph Perry, D-Bangor, and Rep. Richard Woodbury, an independent from Yarmouth, also would boost levies on beer, wine, cigarettes, bar drinks, prepared meals and lodging.
Meanwhile, a host of other measures have been drafted or considered, including one advanced by Rep. Ben Dudley, D-Portland, and endorsed by a liberal organization known as Taxpayers for a Fair Budget that would bolster targeted property tax relief provisions, set a new top rate of 10 percent for the wealthiest income taxpayers, expand the sales tax to some services and reduce parts of the business equipment tax reimbursement program.
A proposal floated by Sen. Ethan Strimling, D-Portland, would eliminate sales tax exemptions and reduce the sales tax rate to 2 percent while broadening income tax brackets and increasing the earned income tax credit, Strimling said.
Rep. John Eder, a Green party lawmaker from Portland, would apply the sales tax to tourism-related categories and direct new revenue toward targeted property tax relief. House Majority Leader Glenn Cummings, D-Portland, favors setting just two income tax rates, perhaps 5.5 percent and 7.5 percent, and Rep. Sawin Millett, R-Waterford, would broaden the sales tax and reduce it to 4 percent while also lowering the top income tax rate to 8 percent.
Rep. Sean Faircloth, D-Bangor, suggests hiking taxes on beer, wine, bar drinks and cigarettes, boosting the meals and lodging tax during the months of May through October, establishing a soft drinks tax and raising the income level at which the highest marginal rate would apply.
Rep. Thomas Watson, D-Bath, would ask state voters to approve a sales tax expansion and use additional revenue for education funding; Rep. Leila Percy, D-Phippsburg, would repeal sales tax exemptions, credits and refunds and lower the rate from 5 percent to 2 percent.
The Taxation Committee plans to hold an informal session Friday, when Baldacci’s package is expected to be unveiled, to hear from sponsors of the various plans.
The committee then would reconvene Monday to hear comments from tax system experts, hold a formal public hearing on proposed legislation Tuesday and begin work sessions immediately on Wednesday.
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