Maine’s auto excise tax needs to be reformed to reflect the true cost of the vehicles not an imaginary Manufactured Suggested Retail Price, or MSRP, because very few people purchase new vehicles at these inflated costs. We need to be fair to working families by taxing vehicles at the actual costs of the vehicle. In addition, we need to demand a responsible fiscal budget policy from our towns and cities like we demand from state government.

The Maine Heritage Policy Center, a nonpartisan research and educational organization, cited some stunning figures: In 2004, Maine residents passed the Maine Municipal Association initiative that mandated the state fund 55 percent of local education with the promise that property tax would drop 15 percent. The governor and the Legislature provided municipal governments with $278 million in the past four years, translating into a 25 percent increase.

Counter to the increased state funding to local municipalities, local spending increased $659 million, a 22 percent increase. Property tax increased $343 million, which translated into a 21 percent increase.

A future ballot question would cut Maine’s high auto excise tax in half and provide $80 million in real tax relief to Maine families and businesses. For example, the owner of a 2008 Ford Focus will save $615 over five years with lower auto excise tax.

An Act To Decrease the Automobile Excise Tax and Promote Energy Efficiency decreases the excise tax imposed on motor vehicles for the first year from 24 mills to 12 mills, for the second year from 17.5 mills to 8 mills and for the third year from 13.5 mills to 4 mills and imposes a 4 mill rate for the fourth and succeeding years.

This bill also exempts from the excise tax imposed on motor vehicles the first three years of a hybrid gasoline-electric vehicle, a fuel-cell-fueled or hydrogen-fueled vehicle or a highly energy-efficient vehicle that has a highway fuel economy estimate of at least 40 miles to the gallon. After the first three years, the rate of excise tax is the same as on other motor vehicles of the same age.

In an effort to create positive market conditions that support alternative energy and decrease our dependency on foreign oil, I strongly support the hybrid provision in the legislation. This bill also exempts from the sales tax 100 percent of the sale or lease price of a new hybrid gasoline-electric vehicle, a fuel-cell-fueled or hydro-gen-fueled vehicle or a vehicle with a highway fuel economy estimate of at least 40 miles per gallon.

I strongly support fair tax reform at all levels of state government for Maine families but it needs to be accompanied by consistent and equitable fiscal budget policy by local municipalities.

H. David Cotta, R-China, represents District 55 in the Maine House. He is a member of the State and Local Government Committee.