May 16, 2010

In June 8 primary, taxes loom

Maine's gubernatorial candidates outline positions for an election which also asks voters whether to repeal a tax reform law.

By Susan M. Cover scover@mainetoday.com
State House Bureau

AUGUSTA - All 11 candidates running in the gubernatorial primary agree on one thing: Taxes are too high in Maine.

ISSUES AND ANSWERS

Where do Maine’s Republican and Democratic gubernatorial candidates stand on major issues facing the state? In a series of packages, the Maine Sunday Telegram will explore policy questions and report where the candidates stand and what plans they offer.

THE SCHEDULE


April 18: Economic development
April 25: Education
May 2: Energy
May 9: Health care
Today: Tax reform
May 23: Social issues

MORE ONLINE

Governor's Race special section

How to reduce them -- and whether to pledge never to raise them -- is where the seven Republicans and four Democrats part ways, sometimes even within their own parties.

The tax issue, which has plagued governors for decades, has taken on a new life this election cycle, with voters scheduled to decide June 8 whether to repeal a tax reform plan passed by the Legislature last year.

It was a party-line vote, save for one Republican: Sen. Peter Mills, R-Cornville, who's competing for his party's gubernatorial nomination.

The new law lowers the top income tax rate from 8.5 percent to 6.5 percent, expands the 5 percent sales tax to more than 100 services and increases the meals and lodging tax from 7 to 8.5 percent.

The plan is revenue neutral, which means it neither adds to nor subtracts from state coffers. The loss of revenue to the state from the cut in the income tax would be offset by the new sales taxes and increased meals and lodging taxes.

The overhaul is an attempt to stabilize state revenue while reducing the income tax for most Mainers, supporters say.

Opponents say the expanded sales tax will hurt low-income Mainers who need to pay for services the sales tax will now apply to, such as car repairs. Also, some small businesses will now, for the first time, have to collect the sales tax.

The business community is split on the issue -- the Maine Merchants Association opposes it and the Maine State Chamber of Commerce supports it.

Regardless of the outcome, the next governor will need to address taxes in a meaningful way -- either by overseeing implementation of the law, or by finding another solution to ease the burden on Maine residents and businesses.

Below, where the candidates stand on the ballot question and other tax issues. 

REPUBLICAN STEVE ABBOTT

He favors repeal but wants to lower the income tax

Abbott supports the tax reform repeal, although he recognizes the need to reduce the income tax.

However, he opposes the expansion of the sales tax to more services.

He said the law passed by Democrats expands the sales tax to areas he doesn't think working Mainers can afford, such as auto and appliance repairs.

Another way to bring in revenue is to get more people back to work, he said.

"We don't have enough taxpayers in the state," he said.

Abbott, former chief of staff for U.S. Sen. Susan Collins, has not taken a no-new-taxes pledge, which he sees as a gimmick advanced by certain special interest groups.

But that doesn't mean he wants to raise taxes.

He believes that by cutting spending -- getting rid of Dirigo Health and reducing the number of state workers -- the state can reduce the need for revenue.

From his perspective, the property tax is the most onerous burden on Maine people. As governor, he'd want to help cities and towns work together by regionalizing services to save money.

"It's a leadership issue," he said. "It's not something the governor can order, dictate or mandate." 

REPUBLICAN BILL BEARDSLEY

His plan for relief includes taking no-new-taxes pledge

Beardsley, former president of Husson University, said he supports the repeal effort.

He wants to lower taxes in many areas, but said it's not practical to talk about cutting taxes until the state budget is balanced.

"You have to cut costs first," he said.

To help the economy grow, Beardsley said, the governor must send a strong signal to businesses that the state is willing to help them by reducing corporate income taxes. He would also cut the inheritance tax to reduce the number of people who leave the state for part of the year to avoid full-time residency status.

(Continued on page 2)

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