AUGUSTA, Maine — Maine is examining multiple proposals for tax reform that would extend the state sales tax to personal services such as drycleaning.
Legislators’ goal is to reduce state income taxes — currently a graduated system charging 2% to 8.5% on personal earnings — as well as offer property tax relief and tax rebates for low-income owners and renters.
The leading plan would eliminate $250 million in income and property taxes and raise about the same amount in new sales taxes. The Maine Revenue Service says more than half of the new sales taxes would be paid by out-of-state residents visiting Maine and out-of-state corporations.
If passed, the 5% sales tax would be applied to previously exempt goods and services such as movie tickets, health club memberships, drycleaning and car repair, pet grooming, and property services such as painting, housecleaning, pest control and lawn care.
An alternative proposal would add increased restaurant and lodging taxes, increase taxes on beer and wine, and reinstate a sales tax on snack foods.
Another would extend the sales tax to services and increase its rate to 6%, while establishing a flat state income tax of 4%.
While reform efforts have failed in the past, state representatives hope that an early review of these proposals will result in new legislation.
Have a question or comment? E-mail our editor Dave Davis at [email protected].