A plan to cut business taxes could be ready for legislative debate as early as next month, but towns and cities fear changes would end up hurting them.
“I don’t know if everyone will come out of this 100 percent satisfied,” said Michael Starn, spokesman for the Maine Municipal Association. MMA is among the special-interest groups meeting with top legislators to change the way personal property taxes are collected.
Gov. John Baldacci floated a plan last year whereby businesses would no longer pay personal property taxes; the state would reimburse cities and towns for some of the lost revenue.
Businesses supported the bill but town and city officials argued against it, fearing too much loss of revenue. It lacked legislative support and never went to a vote.
“We’re hoping we can reach some compromise, something that doesn’t hurt municipalities,” Starn said.
He said the MMA this week planned to bring a proposal before legislators, the Maine Chamber of Commerce and the Maine Merchants Association.
“At least, it will be something to discuss,” Starn said.
Legislators should have a draft bill ready in February, according to Ted Potter, chief of staff for state Rep. John Richardson, the speaker of the House.
The new program would be a successor to the state’s Business Equipment Tax Reimbursement program. The BETR program reimburses businesses for some of the taxes they pay on equipment used for manufacturing.
Those personal property taxes are the problem, according to business leaders. They punish businesses for expanding, said Chip Morrison, president of the Androscoggin County Chamber of Commerce.
“Nobody can defend this tax,” he said. “If a business wants to stay competitive, they have to invest in new equipment. If they do invest in Maine, they get taxed.”
Jay Town Manager Ruth Marden said that getting rid of personal property taxes would devastate communities that depend on them.
“They say that personal property taxes are about 10 percent of the state’s tax base, but in Jay it’s more like 76 percent,” Marden said. She’s skeptical that the state would reimburse the bulk of Jay’s $15.6 million property tax commitment.
Business leaders rallied last week in Augusta in support of changing Maine’s personal property tax rules.
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