May 2, 2013

Maine tax code overhaul gets tepid response

Several critics attack the sweeping proposal as too similar to a reform plan overturned by voters in 2010.

By Michael Shepherd mshepherd@mainetoday.com
State House Bureau

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"We'll let this thing play itself out," he said, "but as a Republican leader, it's not something we'd generally look favorably on."

The previous tax reform package was passed by the Legislature in 2009. A year later, it was defeated at the polls, after a campaign led by interest groups and supported by Republicans.

The package broadened the sales tax but didn't raise the rate. The meals and lodging tax rate would have moved from 7 percent to 8.5 percent. The current plan would raise the meals tax to 8 percent, and increase the lodging tax to 10 percent.

The previous package didn't tax groceries, and it would have established a flat, 6.5 percent income-tax rate, higher than the 4 percent proposed in the new plan.

Rep. Lance Harvell, R-Farmington, one of the Gang of 11, said he supports the plan because it would create a simpler tax code that wouldn't exempt anyone, as the current code does.

"That has led to a convoluted tax system that no one can understand and Joe Six-Pack certainly doesn't have a shot at," Harvell said.

Curtis Picard, executive director of the Retail Association of Maine, said his members would be concerned about the timing of sales tax changes. If they are made by July 1, the beginning of the next fiscal year, they could put a large burden on small businesses to change computer systems quickly, he said.

Picard said he is also troubled by the proposal's similarity to the 2010 plan, and he questioned whether the Legislature could protect it from special interests that would seek sales tax exemptions.

"Are they really going to have Girl Scouts collect sales tax on cookie sales? Are you really going to tax home heating oil? That's in there," he said. "These groups come in and say, 'Here's why we're exempted,' and some have legitimate reasons."

Michael Shepherd can be contacted at 370-7652 or at:


Twitter: @mikeshepherdme

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