Committee votes to increase sales tax in Maine

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May 7, 2013

Maine

By Nick Katers

AUGUSTA, Maine: A proposed increase in Maine’s sales tax has been approved by an 8-3 vote of the Taxation Committee, Maine State Legislature. LD 1141 sponsored by Representative Charles Theriault (D) would increase the state sales tax from 5 percent to 6 percent. Theriault proposed the sales tax increase in response to declining returns from a revenue-sharing plan with municipal governments.[1] The tax increase would only be activated if revenue sharing declines by at least 5 percent from year to year.[2]

The proposed bill coincides with tax overhaul legislation proposed by 11 state legislators that would expand items covered by sales taxes. LD1496 is designed to generate enough revenue from sales taxes to relieve property taxes throughout the state.[3] The Maine Revenue Service concludes that increasing the sales tax as proposed in LD1141 would increase revenue by $163 million in the first year.[4]

Theriault’s proposal follows a 6-3 vote by the Taxation Committee in April that rejected Governor Paul LePage’s proposal to eliminate revenue sharing to municipalities. Additional proposals in the Taxation Committee have suggested raising income taxes on individuals earning more than $100,000, raising cigarette taxes by $1.50 per pack, and eliminating income taxes in favor of sales taxes.[5] LePage and state legislators have debated ways to balance Maine’s 2014-2015 budget, which currently faces a $128 million shortfall due to declining tax collections.[6]

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