Houlton council opposes excise tax initiative

By Jen Lynds, BDN Staff
Posted Oct. 16, 2009, at 9:02 p.m.

HOULTON, Maine — Fearing a significant loss in revenue that town councilors fear may cripple the town financially, the group voted 5-0 in favor of a resolution opposing Question 2, which sets out to reduce excise taxes.

The question before voters reads: “Do you want to cut the rate of municipal excise tax by an average of 55 percent on motor vehicles less than six years old and exempt hybrid and other alternative-energy and highly fuel-efficient motor vehicles from sales tax and three years of excise tax?”

During a meeting earlier this week, councilors agreed with Town Manager Douglas Hazlett’s assertion that if the question passes, it would “be detrimental to communities across the state.”

The question seeks to cut excise taxes on newer and energy-efficient vehicles. If approved, it essentially would cut the rate of the municipal excise tax by an average of 55 percent on motor vehicles less than 6 years old. It also would exempt hybrid and other alternative-energy and highly fuel-efficient motor vehicles from sales tax and three years of excise tax.

If Question 2 passes, vehicles older than 5 years would not see any change. Opponents of the measure have pointed out that nearly 70 percent of vehicles on the road in Maine are older than 5 years.

Many towns and cities across the state are worried about what will happen to their budgets if they lose excise tax revenue. The Maine Municipal Association has joined them in expressing concern about the effect of lost revenue.

In Houlton, Hazlett said that the town stands to lose $320,000 in revenue if the majority of voters support Question 2.

Excise tax is an annual tax that must be paid when registering a vehicle in the town where the owner lives. The town that collects the tax can use it as revenue toward the annual town budget.

Hazlett first expressed concern about the issue in late August, when he explained that 88 percent of the town’s revenue comes from sources such as property and excise taxes and revenue sharing. Revenue sharing and excise taxes are heavily affected by the economy.

Town officials expect to see a decrease in revenue sharing next year and predicted earlier this week that a reduction in excise tax revenue would be a huge blow to municipal finances and taxpayer pocket books.

“If this passes, it would cost the town $320,000 in revenue,” said Hazlett. “It would be hard to lose that much without a tax increase.”

“If it seems too good a deal, it is too good a deal,” Hazlett continued. “I hope people will see that this is fundamentally flawed.”

Councilors echoed his sentiments, acknowledging that the loss would make it extremely difficult to maintain or lower taxes.

Chris Cinquemani, chairman of the Yes on 2 campaign, rejected the comments from the town officials. Cinquemani said that local politicians, including town and city managers and councilors, have displayed “outright hostility” toward the referendum.

“That hostility has been overwhelming,” he said. “It speaks to the unwillingness of local politicians and the government to be more efficient and to be better stewards of taxpayer dollars.”

Cinquemani touted the referendum as a measure that would save the average Maine family $800 over the first five years of vehicle ownership.

“That puts money back into the pockets of Mainers,” he said. “I feel it is offensive that local politicians are so unwilling to find ways to provide tax relief to citizens. They focus on how much this will hurt their budgets and not what it will do for taxpayers. They don’t want to find ways to save money for people.”

Cinquemani also pointed out that Question 2 would exempt hybrid and other alternative-energy vehicles from sales tax and three years of excise taxes.

“That will encourage people to buy clean cars, which will lead to cleaner air and energy efficiency,” he added. “This is beneficial to many people in many ways.”

http://bangordailynews.com/2009/10/16/news/houlton-council-opposes-excise-tax-initiative/ printed on July 30, 2014