06/08/2007
The Legislature's Taxation Committee voted 11-2 late on June 6 to recommend sweeping changes in the state's income and sales taxes.
Some initial information is presented below. Please periodically check the NFIB-Maine Web page for updated information as it becomes available and is posted.
Personal income tax changes that cut taxes by about $195 million include:
- set flat rate of 6 percent
- abolish Alternative Minimum Tax
- conform with federal Sec. 179 depreciation rules
Property tax changes that provide about $41 million in relief for homeowners include:
- expand Homestead exemption to $26,000
- increase Circuit Breaker benefits
- allow people 65 and older to defer on paying taxes
The overall income and property tax cuts for individuals and homeowners amount to about $246 million.
Corporate income tax changes that provide some tax relief and provide some tax increases results in a net tax increase of about $6.8 million:
- set flat rate of 8.93 percent
- abolish Alternative Minimum Tax
- conform with federal Sec. 179 depreciation rules
Sales tax changes that increase taxes by about $185 million include (download the PDF below for a detailed list of services affected):
- 8 percent meals & lodging tax (increase from 7 percent)
- personal services tax (new)
- personal property services tax (new)
- real property services tax (new)
- installation, repair, and maintenance services tax (new)
- transportation and delivery services tax (new)
- amusement, entertainment, and recreational services tax (new)
- telecommunications services tax (new)
- various other new or increased sales taxes
Other tax changes that increase revenues by about $51 million include:
- beer and wine excise tax rates doubled
- real estate transfer tax significantly increased
Constitutional amendments: A majority of the Taxation Committee also voted in support of amendments to the Maine constitution that must ultimately be approved by the voters:
- authorize municipalities to adopt a local option sales tax (that must be used for property tax relief)
- authorize municipalities to opt out of the Homestead exemption increase
- require a two-thirds vote of the legislature to INCREASE the RATE of income, sales, or motor vehicle excise taxes (this applies only to rates, not tax burdens)
- require a two-thirds vote of the legislature to DECREASE the RATE of income, sales, or motor vehicle excise taxes (again, this applies only to rates, not tax burdens)
The June 8 edition of the Portland Press Herald contains an article that provides additional specifics about the various tax changes.
