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[i]Editor's Note: Great news! Thank you, Senate Republicans.[/i]
Senate Republican Office
June 12, 2007
Tax Shift Plan Does More Harm Than Good
Senate Republican Members Strongly Oppose Taxation Committee's Proposal
AUGUSTA "“ Members of the Senate Republican caucus have expressed their opposition to a tax plan developed by the Legislature's Taxation Committee. The committee's plan would institute a massive expansion of the State's sales tax, and further increase the tax on meals, lodging and snacks. These tax expansions and increases would offset some reductions in the state income tax and local property taxes, according the some Taxation Committee members.
Despite the State's 2nd highest overall tax burden in the nation, Maine currently exempts many goods and services from the sales tax that other states do not. Of the 168 possible categories of items subjected to a sales tax nation-wide, Maine only taxes 24. The Taxation Committee's plan would drastically increase the amount of items and services taxed, and subject new purchases to the tax, including: haircuts, gym memberships, movie tickets, landscaping, car repairs, newspapers, summer camp, pet services, snow removal, security system installation and civic organization memberships, to name a few.
Under the plan, a series of tax winners and losers would be created in the State, with winners seeing an average tax decrease of $338 and losers further burdened by an average of $413 in tax increases, according to Maine Revenue Services. Some Senate Republicans have expressed doubts about the benefits projected by the committee, and wonder whether the few tax reductions would cause real and positive tax relief in light of the massive sales tax expansion on goods and services purchased each day.
Senate Republican Leader Carol Weston, of Montville, expressed her own displeasure with the committee's plan, and criticized their secrecy. "This is a major piece of policy with potentially severe implications for the people of Maine, particularly in the rural regions of the State," she said. "For the longest time this tax reform plan has been slowly traveling through the State House, hiding behind budget negotiations and school consolidation debates, waiting for the right moment to appear out of the shadows."
Senate Republican members are joining many business associations, including the State Chamber of Commerce, in opposing the plan devised by the Taxation Committee. In addition to the questionable benefits this tax shift would provide, the business community expects severe disadvantages as a result of the sales tax expansion and the added costs and labor involved in sales tax collections for small businesses. "When the State mandates higher costs for goods and services, sales are naturally going to drop off," Sen. Weston explained. "In no way does this plan foster business development or encourage job creation, and it certainly doesn't provide real tax relief for the people of Maine."
With its recent vote out of the Taxation Committee, the plan will be taken up by the full Legislature some time this week.
Senator Carol Weston
Senate Republican Leader
Communications Director, Senate Republican Office