‘Feel-good’ bill for tax holiday clears House

Posted May 29, 2009, at 8:22 p.m.

AUGUSTA, Maine — Mainers and visitors to the state would pay no sales taxes on many purchases during the Columbus Day weekend this fall under a proposal initially adopted by the House 81-65 on Friday. But the measure faces certain opposition in the Senate because of its $6 million price tag.

“This is a simple bill aimed at helping our retailers,” said Rep. Meredith Strange-Burgess, R-Cumberland, sponsor of the legislation. “It is meant as a pilot to see if it will help retailers, as many of us believe it will, when they really need the help.”

She said the measure, as amended, would apply only to items costing less than $2,500 and would exclude a few items, including tobacco products. She said the Oct. 10-12 weekend is when a lot of visitors come to the state for the foliage and traditionally has been a strong weekend for visitors from Canada.

But Rep. Mark Bryant, D-Windham, said the state couldn’t afford to take a chance with the tax holiday as a possible way to boost retail sales.

“We don’t know how much of this would be sales that were delayed because people knew the holiday was coming,” he said. “We don’t know how many sales would have happened anyway.”

Sales tax holidays of some type have been used by 17 other states to spur retail sales. In some states the sales tax holiday has been tailored to provide specific help to consumers, such as those buying back-to-school clothes and supplies.

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Several lawmakers provided anecdotal examples of how sales tax holiday programs have worked in other states, but there are few studies of holidays similar to the proposal before lawmakers.

“I have seen this program enacted and work in other states,” said Rep. Michael Celli, R-Brewer. He rejected arguments by opponents who pointed to the fiscal note on the bill, which estimated it would cost the state $6 million in lost revenue.

“I think we should also spend some time making projections of how many businesses are going to go under if we don’t pass this bill,” he said.

Rep. Kerri Prescott, R-Topsham, said her mother lives in a state that has sales tax holidays to spur retail sales and they clearly work there. Rep. Brian Langley, R-Ellsworth, took a different tack, arguing the sales tax break would spur weatherization at a time when Mainers are getting ready for winter.

“Let’s give them an incentive to button up and batten down for the winter,” he said. “This could be a great catalyst, and it is worth a try.”

Rep. Thom Watson, D-Bath, the House chairman of the Taxation Committee, said the measure probably would help retail sales, but he questioned whether the cost to the state treasury in lost revenue is worth it, even if the money could be found to pay for the bill.

“I hate to be the Grinch that stole the sales tax holiday,” he said. “I don’t see where we are going to find $6 million. If we pass this, it will die on the table.”

The lawmaker who controls which bills go on the Special Appropriations Table is the Senate chairman of the Appropriations Committee, Bill Diamond, D-Windham. He said there are dozens of bills that would cost money already on the table, and he expects all will die in the closing hours of the session because there is no money to fund them.

“I am going to be the mother of all Grinches,” he said. “We can’t let this pass. We can’t afford it, and it will be killed at some point. There are too many of these bills being passed that have a price tag, and we have no money.”

Diamond said he is convinced that at some point in the legislative process, lawmakers will “come to their senses” and defeat legislation that may “feel good” but cannot be paid for.

The Senate has yet to consider the sales tax holiday but has given initial approval to a $20 million tax break on the income taxes paid on military pensions. It also is not paid for.

“And it won’t pass in the end, either,” Diamond said.

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