ROCKPORT, Maine — A debate on Question 1 at the Samoset Resort Tuesday night opened up discussions about tourism, income taxes, sales taxes and who should bear Maine’s tax burden.
Rep. John Piotti, D-Unity, the original sponsor of the legislation, defended the measure, stating that the current tax system is broken.
“It is designed to take in the same amount of money we do now, just in a smarter manner,” Piotti said of the new tax laws that have been put on hold pending results of the citizen-initiated referendum question.
Greg Dugal, the executive director of the Maine Innkeepers Association, asked voters in the audience to overturn the legislation, stating that it could hurt Maine’s tourism industry.
“The largest industry in the state is tourism,” Dugal said. “So why would we want to alienate people who come here and support our largest industry and our largest employer?”
Question 1 asks: “Do you want to reject the new law that lowers Maine’s income tax and replaces that revenue by making changes to the sales tax?”
Before the debaters were allowed to spar, Michael Allen from the Maine Revenue Service gave a brief overview of the legislation and what effects it would have.
According to Allen’s presentation, 95.6 percent of Mainers will see their income tax cut in 2011, and 87.4 percent of Mainers will see an overall tax cut after any new sales taxes are paid. Projecting a $107 million drop in total income taxes collected in 2011 and a $53 million hike in sales taxes, Allen estimated the changes would lead to a net reduction in Mainers’ taxes of $54 million that year.
Dick Grotton, who debated to overturn the new law, countered that people who do business in Maine would have to start paying taxes on more than 100 new items and services. He listed a melange of services to be taxed, including amusement parks, mini golf, historical sights, house cleaning, sporting acts and circuses. Grotton argued that these taxes unfairly target low- and medium-income households, who, generally, play mini golf, eat out and sightsee.
“Think about what families do,” Grotton said as he read from the list of 102 new goods and services that would be taxed if the law is backed by the June ballot vote.
Proponents of the law argued that although families would be taxed more on those goods, the overall savings in a year would allow them to have pocket money to pay for the extra fees.
“This legislation gives 95 percent of Mainers tax relief. That’s very important,” said Wick Johnson, who debated for supporting the legislation. “I’m also voting no because it moves Maine away from being a high income tax state.”
In an interview after the debate, Dugal said he simply does not think the new tax system will work — “I’m betting it won’t.
“And I don’t want to tax visitors more,” Dugal said. “They are our lifeblood — where do you draw the line?”
Piotti argued that keeping the new tax law would be beneficial for both Maine residents and business owners.
“It will spur economic development, create jobs, stabilize state revenues and reduce the tax burden for most Mainers,” Piotti said.
Some audience members showed concern about the tax cuts to high-income taxpayers.
“Higher income people get bigger [dollar] cuts, because they pay more in taxes. Lower income people get higher [percentage] cuts,” Allen stated in his report.
Piotti said the new law will reduce taxes for most Mainers. “It doesn’t unduly reward the rich,” he said.
Grotton said that to balance the reduction in income taxes, a lot of sales taxes will fall, in a large degree, on medium- and low-income families.
John Ware of Owls Head came in thinking he would vote yes on Question 1 and left feeling the same way. He fears that the law would drive tourists from Maine, stating that some Mainers already go to New Hampshire to shop because there is no sales tax.
“People already drive around town to save one penny on gas,” Ware said.
Chuck Kruger, a state representative from Thomaston, said he came in thinking that he would vote no, and he left feeling the same way.
“I didn’t hear anything from the yes side that would have changed my mind,” Kruger said. “I think that lowering the income tax is far more important than adding a few more categories to the sales tax in order to pay for it.”
The debate was sponsored by the Penobscot Bay Regional Chamber of Commerce and moderated by Steve Betts, an associate editor of the Knox County publication the Herald Gazette.