AUGUSTA (AP) – With this year’s regular session of the Legislature drawing toward a close, an ambitious plan put forth by Taxation Committee majorities to broaden the sales tax and lower the income tax appears to be more than stalled.

“They’re pretty well stuck on it,” Gov. John Baldacci said Monday as action on the two pieces of the panel’s plan remained pending in the Senate and House of Representatives.

“At this point, I’m less than hopeful,” said Democratic Sen. Joseph Perry of Bangor, a Taxation Committee co-chairman who favors the panel’s package.

One sticking point has been a proposed constitutional amendment put forth by the Legislature’s Taxation Committee that would set two-thirds majority requirements for approving changes in certain taxes.

It has drawn support in the Senate – from Republicans who philosophically favor it and from Democrats who view it as a cost of getting some GOP support on the tax-rate side – but its fate has been considered problematic in the Democrat-controlled House.

Meanwhile, the statutory package from the Taxation Committee to rebalance the tax code has hit major, if predictable, opposition from the business community.

It calls for a restructuring that would lower the top income tax rate in the current multi-tier system from 8.5 percent to a flat 6 percent for all.

Additionally, it 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.

Some groups, like AARP in Maine, have lined up in support. But others, including the Maine State Chamber of Commerce, are working actively against.

Chamber President Dana Connors said Monday that while the Taxation Committee plan has met with significant opposition, it was too soon to declare the debate over. “I think that there’s a real effort to try to find an acceptable alternative. I don’t think the issue is dead by any means,” Connors said.

He added, however, that “time may be running out,” and, indeed, House and Senate leaders are looking to conclude the session this week.

“It’s a very ambitious package that they’ve put forth,” Baldacci said. “I’d like to see more bipartisan support.”

Baldacci said he favored not just “talk reform” but “tax relief.”

An analysis by state revenue officials has said the overall committee 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.

Perry declined to cast Baldacci as a flat-out opponent.

“He’s concerned. This is sweeping change. … He wants to make sure there is massive public buy-in,” Perry said.

Various discussions on altering the committee package have touched on elements ranging from scaling back any sales tax broadening to replacing much or all of it with an increase of the 5 percent sales levy to 6 percent, where it was set for much of the 1990s.

Other ideas have included sending the matter back to committee with an eye toward bringing the issue before the full Legislature again in a special session or in next year’s regular session.


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.