Vote no on Question 1 to lower taxes and improve the economy

Posted May 28, 2010, at 8:22 p.m.

Our leaders in Augusta, those on county commissions and school boards, and those in town and city halls throughout Maine cannot continue to ignore a stubborn and troubling truth: Taxes here are too high, and government is too wasteful.

The numbers don’t lie. Maine has too much bureaucracy at the state level and too many small units of government delivering services locally. The state also hasn’t faced up to questions about the affordability of its public pension system and Medicaid policies.

At the Bangor Region Chamber of Commerce we have identified our tax burden and the government restructuring required to lower it as a priority “issue of impact.”

Still, this is not the only public policy issue that affects business and growth. Education matters, so does regulatory policy, and how we tax matters as well. Not all taxes affect our economy equally, and regardless of the size of Maine government, we need to be smart about tax policy.

And that is why the board of directors of the Bangor Region Chamber of Commerce voted on May 20 to reaffirm its support for the tax reform measure that is the subject of a people’s veto question on the June ballot.

We urge all who want to see Maine grow and prosper to vote no on Question 1. Doing so will preserve a law that will make Maine a more competitive and vibrant place to do business.

Let’s be clear. Question 1 does not address wasteful spending. But it does change tax policy in a way that will encourage growth.

By lowering Maine’s top income tax rate from 8.5 percent to 6.5 percent (or 6.85 percent for those earning $250,000 or more), this law puts more money into the pockets of Maine income tax payers. This cut will go to the bottom lines of many small businesses, giving them more capital with which to grow.

This cut will also signal to businesses outside our borders that Maine can make difficult policy choices in order to encourage economic growth. It will place Maine more closely in line with other states when it comes to income tax policy, a critical consideration for any business thinking of relocating.

This positive step forward on tax policy does not come “free,” however, and that makes this a controversial plan. To make up for the lost income-tax revenues, the sales tax would be broadened to include services, including many repair services as well as entertainment. The plan also calls for raising the meals and lodging tax slightly. However, that increase still leaves Maine’s “tourist tax” at or below many of our competitor states.

On balance, it’s a tradeoff that will produce positive results for our economy, but some who are directly affected by the broader sales tax and higher meals and lodging levy see themselves “losing” with this change.

That remains to be seen. Nearly 90 percent of all Mainers will see their taxes fall as a result of this plan because people from outside our borders will be paying a larger share.

Still, this hasn’t been an easy issue for the business community. At the Chamber, we recognized this. That’s why, before taking a position on Question 1, we sponsored a forum on the issue. We also asked members to e-mail us with their thoughts. And we sent the issue back to our governmental affairs committee for reconsideration.

The result of that deliberative process is an endorsement of the tax reform plan. On Tuesday, June 8, we urge all Mainers to cast a vote for a brighter future and a better business climate by voting no on Question 1.

Michael Ballesteros is the chair of the board of the Bangor Region Chamber of Commerce and dean of development and business services at Eastern Maine Community College.

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