Maine Repeal Dirigo Tax Referendum, Question 1 (2008)

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The Repeal the Dirigo Tax Referendum was a veto referendum question that appeared on the November 4, 2008 ballot in Maine as an attempt to overturn the new Dirigo Tax bill that had been approved by the Maine state legislature and signed by Maine's governor. The November 4 vote succeeded at overturning the tax.

The new tax package that was overturned in November primarily taxed beverages--it imposed taxes on the syrup used to make soda in restaurants, bottled soft drinks, beer, and wine. It also imposed a new tax on claims paid by insurance companies. The new tax was intended to raise money to pay for the Dirigo Health Choices program, a government-sponsored health insurance program with 12,637 enrollees.

Election results

Question 1 (2008)
ResultVotesPercentage
Approveda Yes 462,818 64.65%
No253,02635.35%

Election Results via: Maine Secretary of State

Specific provisions

The measure repealed the following provisions:

  • Raise over $100 million for the Dirigo Health Choices program by taxing beverages and doctor's fees. Of the current 12,637 enrollees in the program only about 4500 were not previously insured.
  • Include the following new taxes:
  • a new $4 tax on a gallon of syrup used to make soda in restaurants
  • a new 42-cent-per-gallon tax on bottled soft drinks
  • a doubling of the current tax on beer and wine, to 54 cents a gallon on beer and 65 cents a gallon on wine
  • a 1.8 percent tax on claims paid by insurance companies and the self-insured to replace a similar fee that supports DirigoChoice insurance today.
  • The tax adds up to 2.6 cents for a can of beer, 7 cents for a 750-milliliter bottle of wine and just under 4 cents per 12-ounce soda, according to a legislative analysis.

Supporters

Maine1.gif

The referendum was sponsored by Fed Up With Taxes.

Other supporters included:

  • Maine Beer and Wine Wholesalers
  • Maine Beverage Association
  • Maine Restaurant Association
  • Maine Auto Dealers Association Insurance Trust

Arguments in favor

Notable arguments made in support of th repeal:

  • Maine residents already pay enough in taxes. Maine has the fourth highest tax burden among the 50 states. This is the first opportunity Maines have to reject a tax increase in over two decades.
  • Repealing these taxes will allow Maine residents to keep more of their own money during tough economic times. Unless turned down by voters, these taxes are estimated to cost $40 million in higher taxes each year.
  • If Amendment 1 doesn’t pass, jobs in the beverage industry could be lost. A study done by Todd Gabe, Associate Professor of Economics at the University of Maine, found that the higher taxes would lead to the loss of 395 full- and part-time jobs in the beverage industry due to lower sales. This would mean Mainers would lose out on $8.8 million in wages and salaries. In a “down” business cycle, job growth should be promoted – not discouraged with higher taxes!
  • Passage of the People’s Veto does not eliminate funding for the Dirigo Health Program. No one covered by the Dirigo Health Program will lose their health insurance coverage as a result of the People’s Veto. This fact was acknowledged by the Executive Director of the Dirigo Health Agency at its Board of Trustees meeting on May 20, 2008.

Report on Economic Impact

Dr. Todd Gabe, an economist at the University of Maine, has published a report on the expected impact of the new beverage taxes. If voters do not approve Question 1 to repeal Public Law 629, Gabe estimates the tax will cost up to $40.7 million more per year in raised taxes on beer, wine, and nonalcoholic beverages. Furthermore, sellers of these products would lose out: net sales revenues for beer, wine, and soft drinks would fall by $17.5 million. Furthermore, the study notes that nearly 400 jobs, representing about $8.8 million in income, could be lost as a result of the tax.[1]

Opponents

Opponents included:

Editorial Opposition:

  • Bangor Daily News[2]

Arguments in Opposition

Notable arguments made in opposition to the repeal included:

  • The Dirigo taxes the beverage industry, not consumers.
  • The repeal would deny health insurance coverage to 18,000 families.[3]


Summary

The veto referendum did not repeal any part of the Dirigo Health Plan now in place. It addressed only the new tax law voted in by the legislature to fund the plan. No insured individuals lose their coverage, nor would new applicants be denied coverage because of the veto.

See also

External links

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References