Revenue Ideas and Responses
February 25, 2010 -
In my last email, I laid out a few proposals being tossed around for generating new revenues and help close the steep budget gap. I asked for your opinions on those proposals and encouraged you to send me your ideas. I was thrilled with the response! I heard from a wide variety of folks and gained some great perspective on many issues before the legislature. Today, I'd like to share some of those responses:
Tobacco Taxes
Voters' responses were almost universally in favor of increasing the tobacco tax to help close the budget gap. There are models that exist to help us calculate the effects an increase in the tobacco tax would have on sales, revenue, and smoking behavior. We can expect to see anywhere from a $0.25 to $1.00 increase. This would generate between $23 and $28 million in additional revenue and would be a much-needed boon.
One person suggested that the revenue from such a tax be used to help an associated cost:
"...it seems that a tax should be somehow related to a service, and tobacco and local sales taxes might be tied to local health and education services..." - K.S.
Local-option Sales Tax
The response to the local-option sales tax was mixed. Some saw it as a great way to let municipalities pick up some of the funding losses from the state, while others saw it as an additional cost to doing business and a bad move during this down economy. Personally, I am a supporter of the local-option sales tax because it grants greater autonomy to municipalities and would allow communities like Portland to cover its costs while not raising property taxes.
Sales tax expansion
Some folks suggested that we remove existing exemptions to the sales tax. The legislature has removed a significant number of exemptions for services, while maintaining others (such as ski-lift tickets and golfing).
"Rather than allowing local sales taxes...I'd prefer broadening the state sales tax to include snacks (like potato chips, etc.) and all entertainment tickets, professional fees [lawyers, accountants, hair dressers, holistic-type practitioners (Reiki, aromatherapists, LSW's doing "counseling," etc. etc.)] Rather than continue to starve our society, we should extract more revenue from peripheral, non-essential sources." - P.G.
Business Taxes
While most folks support raising the tobacco tax, most individuals that responded were against any new broad-based tax on businesses, including incorporation licensing fees.
"Any move toward 'fees for all Limited Liabilities Companies or Partnerships in the state' would be a tragic one. As a commercial realtor, I am on the front lines. I work with countless small businesses who struggle enough already in this challenging state. We should be working to free businesses, both big and small from their enormous tax burdens." - L.N.
MDOT/MTA
"How about eliminating the redundancy which exists between MDOT and the Turnpike Authority... Make them one entity... Since I moved to Maine nearly nine years ago, I have been amazed by the waste that exists in the current road maintenance system." - L.N.
This viewpoint - to consolidate the Maine Turnpike Authority (MTA) and the Maine Department of Transportation (MDOT) - is overwhelmingly popular. The MTA maintains the highway, runs the tolls, and collects all profits from the tolls, while the MDOT builds and maintains all other roads in the state. On the surface, consolidation seems like a great idea to reduce any possible redundancies and inefficiencies, but it would likely be met with significant skepticism and push-back from legislators and interested parties. It is likely too late in the session to undertake such a huge restructuring, but might be something worth exploring next session to generate long-term savings.
Other Suggestions
A few individuals offered up ideas of their own to help generate revenue. One person suggested we allow casinos as a quick way to generate economic development in terms of construction and to also provide long-term revenue in the form of new businesses.
Another person suggested creative ways of handling our criminal justice and incarceration practices:
"We spend huge amounts of money incarcerating people, even though we have a relatively low rate of incarceration. Couldn't community corrections be a more cost-effective way of addressing non-violent offenders? I also wonder if we couldn't reduce the expenses of prosecution by looking into Restorative Justice programs" - T.H.
