AUGUSTA (AP) – One day after the Senate took an initial pass on the subject of tax reform, the Maine House of Representatives set itself to a first round of test voting.

In advance, members of the bipartisan Taxation Committee majorities that had forwarded the two pieces of tax legislation to the full House and Senate held a news conference Wednesday to tout the benefits of their package.

“It spans the entire spectrum of Maine people,” said Democratic Rep. Thomas Watson of Bath, a Taxation panelist, referring to the sweeping proposal’s call for income tax reductions and enhanced property tax relief financed by a broadening of the sales tax.

“I’m proud of this package … It is real tax relief for Maine people,” said Republican Rep. Randy Hotham of Dixfield.

Rank-and-file lawmakers through the day continued to absorb leadership briefings and join in hallway consultations. An ad hoc business alliance, meanwhile, billing itself as the No Tax Shift Coalition, distributed copies of a letter written to Gov. John Baldacci urging him to join the opposition.

“This is not meaningful tax reform. It is simply a shift of the tax burden from some taxpayers to others. The proposal would increase and expand some taxes (e.g., sales, corporate income, meals and lodging) to pay for other tax reductions, mainly personal income tax,” the coalition asserted.

“The Taxation Committee deserves a great deal of thanks for attempting meaningful tax reform. They have conducted their work in an open and transparent process, which we respect and appreciate. However, the final product falls woefully short and – in our opinion – does more harm than good,” said the letter from the coalition, which ranges from the Associated Builders & Contractors of Maine to the Wine Institute and includes the Maine Association of Realtors, the Maine Forest Products Council and the Maine State Chamber of Commerce.

A so-called statutory package to overhaul the tax system would lower the top income tax rate in the current multi-tier system from 8.5 percent to a flat 6 percent for all. It also would hold steady the general sales tax at 5 percent, but expand it to include numerous goods and services.

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

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

Potential savings for Maine residents and businesses from the tax code overhaul have been estimated by state revenue officials at more than $140 million. Out-of-state taxpayers would pick up most of the difference.

“It is a tax shift,” Democratic Rep. John Piotti of Unity, a co-chairman of the Taxation Committee, said at the Wednesday morning news conference. “And we should be proud of that.”

Two senators on the Taxation Committee, Republican Richard Nass of Acton and Democrat Ethan Strimling of Portland, hit the radio talk show circuit earlier, arguing for the committee plan.

Given broad business and growing Republican opposition, prospects for passage of the complex plan remained highly uncertain.

On Tuesday, Senate Republican leader Carol Weston, R-Montville, put her caucus on record against the package although two other members of the GOP Senate caucus, Karl Turner of Cumberland and Peter Mills of Cornville, joined Nass and others at the Taxation Committee news conference Wednesday to show their support for the plan.

On Tuesday night, the office of Gov. John Baldacci issued a statement in which he expressed “concerns” but also optimism that “we can all work together to build a plan that will provide real income tax relief while also gaining bipartisan support.”

Among the options under consideration, according to participants in discussions involving the Legislature and the administration, was one to narrow the proposed broadening of the sales tax.

The Maine Heritage Policy Center argued Wednesday that the Taxation panel’s package could leave Mainers nearly $40 million in increased federal income taxes because of reduced tax deductibility.

On Tuesday, without debate or recorded vote, the Taxation panel’s package of constitutional amendments came up in the Senate for the first time and was procedurally moved along to the House.

AP-ES-06-13-07 1404EDT


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