Think tank suggests state slash excise tax

Posted April 09, 2009, at 8:09 p.m.

BANGOR, Maine — A proposal to slice Maine’s automobile excise tax roughly in half would cut about 2 percent of municipal revenue from most towns and cities, according to estimates by the Maine Heritage Policy Center.

The question is: Can municipalities handle a 2 percent cut?

“My answer to that is: Roll up your sleeves and figure it out,” said Martin Sheehan, communications director for the conservative-leaning Portland-based research firm.

Sheehan and other members of the Maine Heritage Policy Center held a luncheon Thursday in Bangor to pitch the group’s plan to address what they feel is the most-hated tax in Maine. The excise tax measure, which was crafted by the center and voted down this week by the Legislature’s Taxation Committee, will appear as a referendum question on the statewide ballot in November.

“This is a unique opportunity for voters to reduce a big tax that generates small revenue for towns,” Sheehan said.

In essence, the proposal would reduce Maine’s auto excise tax by half for cars that are up to 4 years old. Once the car is 4 years old, the tax would not change. The measure also would waive sales tax and excise tax for the first three years for buyers of “green” cars, which meet certain standards.

The crowd at Thursday’s luncheon was friendly, mostly older and conservative. All supported the tax initiative, although some wondered why the “green” element was included.

“What if I don’t want to buy a green car?” asked one man. “It seems like they are taking away my freedom.”

Steve Bowen, a policy director with the policy center, admitted that the motive was political.

“If it provides an incentive for 10,000 more votes, that’s a price I’m willing to pay,” he said.

Opponents of the bill, including most Democrats and groups such as the Maine Municipal Association, have argued that reducing the excise tax would take money directly from towns. That money, hundreds of thousands of dollars in most cases, is used almost exclusively for road repairs.

Sheehan, however, said excise tax is not dedicated and towns are free to use the money how they wish. Asked whether municipalities will be forced to raise property taxes to make up the deficit, Sheehan said that every Mainer is tightening his or her belt, so why shouldn’t towns.

Another criticism of the excise tax reduction is that it helps people who are buying new cars, or in other words, it helps those who can afford a slightly higher tax. Sheehan countered that lowering the excise tax would encourage more Mainers — not just the wealthy — to buy new cars.

Bowen also reminded attendants that Maine Heritage Policy Center’s other major initiative — known colloquially as the second version of a Taxpayer Bill of Rights — would ensure that towns don’t raise any tax without voter approval. The TABOR initiative also is likely to appear on the statewide ballot in November.

erussell@bangordailynews.net

990-8167

BANGOR DAILY NEWS PHOTO BY KATE COLLINS

Martin Sheehan of the Maine Heritage Policy Center reviews an example of a new vehicle’s added consumer costs according to the state’s current auto excise tax during the Maine Prosperity Luncheon on Thursday at the Sea Dog in Bangor. Sheehan presented the program, “Reducing the Auto Excise Tax — Good for Maine Families, Maine Business and Maine’s Environment.”

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