AUGUSTA (AP) – A debate over tax reform is still pending in the Legislature, where the Taxation Committee just Monday morning gave a revenue-neutral package of income, sales and property tax adjustments a final review.

Consideration by the full Senate and House of Representatives is expected later this week.

Supporters now say the package would cut taxes overall for Maine residents by a little more than $140 million, down slightly from previous estimates.

Opposition is focusing on a proposed broadening of the sales tax.

The package would lower the top income tax rate in the current milti-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 numerous services not currently covered.

To provide property tax relief, a homestead exemption would be increased, and a property tax and rent rebate program known as the circuit breaker would be expanded.

A final analysis by state revenue officials says the overall plan would generate tax decreases for nearly 624,000 families, while about 75,000 families would experience tax increases.

Shifting more of the current tax burden to out-of-staters would result in the overall reduction for residents, with winners realizing an average tax decrease of $338 and losers realizing an average tax increase of $413, according to the Maine Revenue Services analysis.

Broad business opposition to elements of the package is expected to build through the week.

The House chairman of the Taxation Committee, Democratic Rep. John Piotti of Unity, warned other panelists Monday about some claims by critics.

“This is quite simply folks who are trying to kill this effort,” he said.

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 and awaits House and Senate consideration.

Republican Rep. Randy Hotham of Dixfield, another Taxation Committee member, said the better than 8-1 ratio between winning and losing taxpaying residents could be cited in two ways, with proponents asserting it showed lopsided benefits and opponents arguing that there were too many on the short end.

Substantially overhauling the tax system without producing losses for some would be “in the real world, not possible,” Hotham said.

Groups of rank-and-file lawmakers were being briefed on the contents of the tax package Monday, with more discussions expected to follow.

The Baldacci administration, which has appeared lukewarm, was also turning its attention to the subject following last week’s passage of a $6.3 billion biennial budget.

As previously outlined, the tax package being backed by a Taxation Committee majority envisions expanding the sales tax 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.


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.