As usual, Maine can’t see the forest for the trees.

Instead of looking at the entire proposed project, “the Gateway at Scarborough” (of which Cabela’s – the Nebraska-based direct marketer and specialty retailer of hunting, fishing, camping gear and related products – is just one tenant) and its huge impact on the town of Scarborough, the region and the state, everyone has focused on a rather minor issue. Cabela’s insists that it does not have to collect state sales tax on mail, phone and Internet sales, an argument that is based on the U.S. Supreme Court’s nexus rulings. Nineteen other states have concluded that due to Cabela’s unique corporate structure, the store does not have to collect sales tax on mail, phone and Internet sales, and Cabela’s is simply asking the Maine Revenue Services for a similar ruling.

Before getting into the specifics of the nexus issue, I would like to review how this project came about. “The Gateway at Scarborough” has grown out of the proposed Cabela’s project. About a year and a half ago, my office was approached by a representative of a “large nationwide outdoor retailer” looking for appropriate sites to locate a new store. I went to work (as I expect my colleagues in other communities did) looking for sites that met the sketchy criteria provided. The site owned by BankNorth quickly became the preferred location. The site was controlled by a group of developers, negotiations got under way and a tentative deal was struck.

But, several hurdles had to be overcome. First, retail facilities the size of the proposed development were not allowed in this zone. To its credit, Scarborough has been a community that has approached economic development as a partnership, looking for the best possible outcome for both the town and the developer. Contract Zoning, a process whereby a community can make exception to existing zoning when it is in the best interest of the community, may be utilized. It also became evident that this project would generate the need for considerable public improvements. Again, Scarborough has partnered with developers to find ways to fund infrastructure and traffic improvements that benefit both parties. It became evident that this project would work far better on a larger scale than simply as a large, albeit destination, retailer. The “Gateway at Scarborough” was born, and has progressed favorably to where we are today.

This is a planned mixed-use development of retail, commercial and office uses. When completed, the 325,000-square-foot project will cover some 65 acres, and cost approximately $74,000,000 to construct. The anchor of this project is the 130,000-square-foot Cabela’s retail store. In addition, there will be another 68,000-square-feet of compatible retail stores; three 6,000 square-foot free-standing restaurant facilities; a 4,000-square-foot full-service banking facility; a 200-room hotel; and approximately 80,000 square feet of professional office space. The entire project will employ approximately 800 people.

This is what we have been trying to accomplish in Scarborough and Maine, and it is being threatened by fear driven by misinformation.

The Cabela’s “tax exemption,” as the Portland Press Herald’s Aug. 29 headline trumpets, is, in fact, not a tax exemption. It is not a tax break. It is not a special privilege, nor is it a slap in the face to other Maine retailers. This decision, if favorable, does not exempt Maine residents from paying the sales tax on items bought from Cabela’s by mail, phone or the Internet.

Cabela’s has asked for an opinion from the Maine Revenue Services on whether its catolog customers would be legally obligated to pay the tax. All Maine taxpayers are required to pay the tax due. The Maine income tax form provides an opportunity for all of us to send the state its due. If a tax isn’t due, then taxpayers can’t be exempt from it.

The truth of the matter is that if the state agrees with Cabela’s that it does not have to collect sales tax from Mainers, what does the state lose? Absolutely nothing. Why? Because the state is not collecting any sales tax from Cabela’s now. What does the state gain? Let’s look at the numbers:

Store facts

Estimated Store Size 130,000 square feet

Estimated Sales $55,000,000

Estimated Employment 270-330

Estimated Annual Payroll $8,200,000

Estimated Annual Visitors 3,000,000

Percentage of Visitors from Outside Maine 30-35

Tourism spending per trip per visitor $274

Cabela’s Employee Benefits

Full-time (32-hour average.) and part-time (20-hour average) workers receive:

Medical, including prescription drug plan, dental coverage and vision plan

401(k) with employer match

Employee stock purchase plan (at 15 percent discount to market)

Employee Assistance Plan

Full-time employees receive company-paid life insurance, and short- and long-term disability insurance

Tax Revenue

Maine state sales tax generated from Cabela’s retail store $2,750,000

(Portion generated from non-residents $825,000 to $963,000)

Personal income tax

Maine income tax generated from Cabela’s payroll $470,000

Corporate income tax

Maine income tax generated from Cabala’s retail store $590,000

Property tax

Scarborough, Maine real property tax levy $260,000

Total annual taxes directly attributed to Cabela’s retail store $4,070,000

Read the numbers! The question here is not one of special treatment. It is a legal matter, pure and simple. The state must determine if the unique corporate structure of Cabela’s exempts it from collecting sales tax on mail, phone and Internet orders. Each state interprets the U.S. Supreme Court’s nexus rulings slightly differently, but we have been told that 19 states have agreed. I believe that it is in Maine’s best interest to come to the same conclusion.

This is what economic development is all about. Scarborough and the state of Maine have a chance to encourage the development of 800 new jobs, to gain over $100,000,000 of new mixed-use development, and to locate a major retailer that provides better-than -average pay and benefits.

If we let special interests and emotions blind us to rational judgment, then we reinforce Maine’s image as an anti-business state and, worse, do a great disservice to our citizens.