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LePage wants state tax on Internet sales, urges Congress to pass bill

Robert F. Bukaty | AP
Robert F. Bukaty | AP
Gov. Paul LePage speaks at a news conference Thursday, Dec. 15, 2011, at the State House in Augusta.
By Eric Russell, BDN Staff

AUGUSTA, Maine — Gov. Paul LePage sent a letter last week to Maine’s two Republican senators urging them to support the Marketplace Fairness Act, which would allow states to collect taxes on Internet sales.

The bill before Congress seeks to change federal tax policy that lets large online-only retailers such as Amazon avoid the collection and remittance of state sales taxes. Traditional retailers have said having two standards hurts the local economy.

“From my experience in the retail world, I can assure you that Maine retailers love competition,” wrote LePage, who spent many years in the retail sector as manager of Marden’s. “They know competition sharpens their services and products, and keeps customers coming back. But the rules need to be fair and applied equally. Give Maine people a chance to compete on a level playing field and they will shine.”

Maine’s governor has not been supportive of new taxes during his time in office, but his letter indicates that he does not see this as a new tax.

“It simply provides for the collection of sales tax already due,” he wrote.

Technically everyone who lives in a state that collects sales taxes owes tax when they buy an item online and use it in their home state. Most states with a sales tax also have a use tax that applies to out-of-state sales, but that has always been difficult to enforce.

Last summer, the National Conference of State Legislatures pointed to a University of Tennessee study that estimated states would lose $23.3 billion in uncollected taxes on Internet sales in 2012. Maine’s share was estimated at $65.4 million.

The federal bill appears to have the support of many business groups in Maine, including the Maine Merchants Association.

“In this state we like to talk about Maine jobs for Maine people, and small businesses in Maine are indeed the backbone of our economy,” said Curtis Picard, director of the association. “If this bill passes, the state’s retailers will compete on a level playing field, and Gov. LePage is to be commended for his strong support of Maine’s local businesses.”

Jennifer Johnson of Johnson Sporting Goods in Portland also was pleased that the governor supported the measure.

“It is really nice to see Gov. LePage support small, locally owned businesses,” Johnson said in a statement. “As the situation stands now, there is a flow of money leaving the state that should be staying here to fuel Maine’s economy.”

It’s not clear when Congress will vote on the Marketplace Fairness Act or whether the bill has support. Attempts to reach representatives for Snowe and Collins were not successful late Tuesday. Last summer, both Snowe and Collins indicated they did not support the tax.

U.S. Reps. Chellie Pingree and Mike Michaud, both Democrats, have been supportive of the measure.

An increase in sales taxes could allow LePage to pay for some of the proposals he has outlined, including a plan to reduce income taxes further, although it’s not clear yet how much extra revenue Maine would get.

“State budget deliberations are well under way, and it would be quite helpful to have certainty about our future revenue streams,” the governor wrote. “I have pledged to lower Maine’s income taxes and stop wasteful government spending. One powerful tool in achieving these goals would be to have the ability to collect taxes that are due.”

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