AUGUSTA (AP) – The Maine Senate has rejected a bill to lower the state income tax rate.

By a 20-15 vote Tuesday, senators beat back the proposal to lower the tax rate from 8.5 percent to 4.5 percent over three years.

Supporters said the lower rate is needed to restore Maine’s economic competitiveness. Opponents said state government cannot afford the billion-dollar loss in revenues that would result.

The bill sponsored by Republican Sen. Douglas Smith of Dover-Foxcroft is separate from a more far-reaching tax reform bill backed by Democrats on the Taxation Committee. Under that bill, Maine’s sales tax would be broadened to cover new services but held steady at 5 percent, while the top income tax rate would drop to 6.5 percent.

AP-ES-06-02-09 1635EDT