Maine voters overturned the tax reform package passed by the Legislature last year by a substantial margin Tuesday.

With 90 percent of the state’s precincts reporting, 61 percent of the voters had voted to repeal the changes to the tax system, and 39 percent had voted to preserve them.

“It was a very confusing referendum question for both sides,” said Crystal Canney, spokeswoman for the No New Taxes for Maine Political Action Committee.  “I certainly hope that the voters understood the question.”

Supporters of the repeal, Question 1 on the ballot, were pleased with the results shortly before 11 p.m.

“If we do win this, it will be extremely exciting,” said Sen. David Trahan, R-Waldoboro, who led the campaign to put the refendum on the ballot. “If we win this, we have to start talking now about what we are going to do in the next session, because I think all of us want to cut taxes. We just have to go about doing it in a different way.”

The reforms, passed with Democratic support in 2009, would have primarily done two things: cut the state’s top income tax rate from 8.5 percent to 6.5 percent and, to offset that revenue loss, expand sales taxes and increase the meals and lodging tax.
Proponents of the tax changes said the plan would raise no new money for the state.

Opponents used that point to criticize the package, saying the state should be cutting expenditures in a lean economy rather than bringing in the same amount of revenue.

Supporters of the changes argued that a predictable revenue flow is necessary for the government to budget effectively. In the recent past, they noted, more than one-third of the state’s sales tax revenue has come from building materials and car sales – both of which fell significantly when the recession hit.

Maine Revenue Services estimated that one-third of the increased sales taxes would be paid by out-of-state tourists, and that 87 percent of the state’s residents would pay less combined sales and income tax.

Curtis Picard of the Vote Yes to Reject New Taxes, a political action committee, said he spent Tuesday working to get out the vote, and continuing to clarify how he wanted people to vote.

A key feature of his group’s campaign against the tax reform package was to highlight the sales tax that would be applied to some goods and services for the first time.

“If you read the ballot question, it’s confusing. If you vote ‘yes,’ it looks like you’re voting for all those new taxes,” he said. “We’re reminding people that they need to vote ‘yes’ to say ‘no.’”

Editor’s Note: This story was updated at 11:55 a.m. on Wednesday to remove material from an earlier version quoting Richard Woodbury.

MaineToday Media State House Reporter Ethan Wilensky-Lanford can be contacted at 620-7016 or at: ewlanford@mainetoday.com