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Will Maine “Modernize and Simplify” Tax Code?


 Maine lawmakers say, "Let visitors pay more sales tax."

Maine’s tax code has been in place for decades. That could mean it works well, and it could simply mean that change is difficult to enact. According to some Maine lawmakers, the latter is true; but if they get their way, change will come. H.P. 1073, which was introduced to the Maine Legislature on May 2, is simply but boldly named: An Act to Modernize and Simplify the Tax Code.

Oh is that all?

Snapshot

Rep. Nathan Libby (D-Lewiston), one of the authors of the bill, notes that Maine tax code “was established in the 1950s in a state that is very different than the state we have today.” His bill seeks “to raise a larger share of tax revenues from nonresidents, while relieving the tax burden on year-round residents.” It would achieve this through the following measures:

  • Lower Maine state income taxes, corporate income taxes and homestead property taxes;
  • Broaden sales tax base to include “nearly all consumer purchases with the exception of health care and education;”
  • Increase sales and excise tax rate.

Lower-income and middle-income taxpayers would be relieved of some of their tax burden through the sales tax fairness credit, which is “automatically integrated into the tax or refund computation and is dependent on income and filing status only.”

Change Isn’t Easy

Although the plan was sponsored by both Democrats and Republicans, it was not well received. House Minority Leader Kenneth Fredette (R-Newport) called the sales tax increase “regressive” and predicted that the plan “won’t get widespread support in his caucus.”  The Bangor Daily News reports that conservatives oppose the plan “because it doesn’t do more to reduce state spending but instead finds ways to collect more revenue to run state government.”

Yet Senate Majority Leader Seth Goodall (D-Richmond) points out the importance of looking “at everything as an entire picture.” While he voiced concerns over the proposed corporate income tax cut and the elimination of the estate tax, he said the plan “sets Maine on a path for greater stability for our budget process.” In addition, he says, the proposed reduction in property taxes is “long overdue.”

It may become even more overdue, because the bill was left on the table of the Legislature’s Taxation Committee last week.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.