AUGUSTA (AP) – The Legislature’s Taxation Committee has come up with a long-awaited reform package supporters say would cut taxes overall for Maine businesses and residents by more than $150 million.

Opposition, focusing on a proposed broadening of the sales tax that is part of the package, is mobilizing and prospects heading into the final weeks of this year’s regular legislative session are highly uncertain.

Still subject to more committee review, the package would lower the top income tax rate in the current multi-tier system from 8.5 percent to a flat 6 percent for all.

The general sales tax rate would be held steady at 5 percent, but expanded to include personal care services, personal property services, real property services, installation, repair and maintenance services, professional, financial and business services, transportation and delivery services, amusement, entertainment and recreational services.

Maine’s meals tax and lodging tax would be raised from 7 percent to 8 percent.

To provide property tax relief, the Homestead Exemption would be increased to $25,000, with the state funding half, and a Property Tax and Rent Rebate Program known as the circuit breaker expanded by reducing tax-to-income thresholds.

The Taxation Committee is backing the plan, 11-2.

A separate package of constitutional amendments, including one to establish super-majority thresholds for the approval of changes in certain taxes, also split the Taxation panel.

For at least some committee members, the proposed changes on the revenue side would have to be twinned with proposed constitutional changes, potentially complicating any push for passage.

Late Wednesday night as the panel cast votes, Taxation Committee Senate Chairman Joseph Perry, D-Bangor, predicted that the panel’s package would come under immediate attack and told his colleagues that despite months of detailed deliberations, their work had just begun.

On Thursday, Democratic Sen. Ethan Strimling of Portland and Republican Sen. Richard Nass of Acton, who see links between the two sides of their committee’s work, joined in a statement hailing the majority accord.

“I am pleased that the tax reform package endorsed by the committee meets the fundamental tenets Senator Nass and I outlined this summer: relief for Maine people, rebalancing for stability, and restraint on future revenue increases,” Strimling said.

“Maine people on average will see a $400 reduction in their overall tax burden. This tax package and the corresponding constitutional amendment limiting tax increases make sure that tax relief goes directly to the people who need it the most,” said Nass.

Gov. John Baldacci had repeatedly urged that any action on tax reform follow, not precede, work on the state budget, which won approval Wednesday night.

The tax rebalancing drew immediate praise from a largely liberal coalition of Maine groups, including the Maine People’s Alliance and the Maine Center for Economic Policy.

The Maine Heritage Policy Center, a conservative think tank, has suggested that the Taxation Committee’s income tax reduction be maintained, but that the rest of the tax package be scrapped.

AP-ES-06-07-07 1619EDT

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