BANGOR (AP) – ExxonMobil Corp. plans to stop supplying jet fuel to Bangor International Airport because of a change in the state’s corporate tax formula that led the oil giant to question the value of doing business in Maine, company officials said.

ExxonMobil notified airport Director Rebecca Hupp that it was giving the required six months notice to terminate its latest five-year agreement with the city, which expires Dec. 31.

A company official told the City Council’s Transportation and Infrastructure Committee this week that a revision in the state’s unitary tax law has the corporation paying the state six times the profit it generates in the state on everything from gas stations to jet fuel.

“The implications are dramatic when you are talking about six times what we are earning,” Roberto Zamora, ExxonMobil’s U.S. general aviation business development manager, told councilors.

The tax law in question previously based a corporation’s tax assessment on payroll, property and sales in Maine and the U.S. Under the old formula, sales were factored twice, and the variables were divided by four, according to Jerome Gerard, acting executive director of the Maine Revenue Service.

With the new formula, which went into effect Jan. 1, 2007, the only factor used in calculating taxes is corporate sales. To determine a company’s tax bill, the state multiplies its apportionable U.S. profit by its Maine sales divided by U.S. sales. The end result is then multiplied by the state tax rate, Gerard said.

Even with high sales in Maine, ExxonMobil’s tax burden was eased by its limited payroll and property in the state, Zamora said.

The tax formula was changed to help Maine businesses that have significant property and large work forces in the state, said state Sen. Joseph Perry, D-Bangor, chairman of the Legislature’s Taxation Committee. By basing taxes on profits, rather than payrolls and property, the tax burden for Maine companies is reduced, he said.

“We did a lot of tinkering with this because, as the economy changes, we’ve wanted to make the state more attractive,” Perry said.

In a letter to Hupp dated June 27, ExxonMobil indicated it did not want to renew its contract to supply jet fuel. Under the agreement, the company has to give at least six months notice.

The letter also asked for a 90-day extension to give notice to push the current agreement’s expiration to March 30, 2009. An extension would give ExxonMobil a chance to make a full assessment of the impact of the tax law change, Zamora said.

“We need to find how to lessen taxation…or legislatively find any possible recourse,” Zamora said.


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