TMCnet News

Eliot Cutler rolls out $185 million proposal to lower property taxes -- and plan to fund it [Bangor Daily News, Maine :: ]
[April 15, 2014]

Eliot Cutler rolls out $185 million proposal to lower property taxes -- and plan to fund it [Bangor Daily News, Maine :: ]


(Bangor Daily News (ME) Via Acquire Media NewsEdge) April 15--AUGUSTA, Maine -- Independent candidate for governor Eliot Cutler continued his roll-out of policy ideas Tuesday with a new proposal to lower property taxes while also increasing state aid to local communities, funding for education and the budget for marketing the state of Maine.



Cutler has also outlined options to pay for the $185 million plan with increases in the sales, meals and lodging taxes, as well as expanding the sales tax to recreation and entertainment activities.

Cutler, who is locked in a three-way race with Republican incumbent Gov. Paul LePage and Democratic 2nd District Rep. Mike Michaud, released the details of his plan Tuesday morning. It calls for a $100 million increase in funding for state towns and cities, a $75 million increase in state education funding and a $10 million increase in funds for branding and marketing Maine.


The plan also includes an increase in the homestead exemption tax rebate program from $10,000 to $50,000 up to 50 percent of the assessed value of a home. Cutler claims that if enacted, it could cut property taxes for Maine residents by between 20 and 40 percent. To counteract the effect on local budgets, Cutler proposes a Revenue Rebates program to reimburse municipalities for the homestead exemption program to the tune of $100 million statewide; a Small Business and Farm Fairness Adjustment, which would reimburse a portion of those entities' property taxes if they pay more than 6 percent of their net income; a $75 million Education Challenge Fund to increase state funding for education; and a Marketing Maine Trust Fund of $10 million annually.

Cutler estimates that it will cost $185 million to fully fund his proposals. One option he proposes is to cover that with the following tax increases: -- A seasonal sales tax rate of 7 percent from May 1 through October 30, excluding auto sales and building materials, and a rate of 5 percent during the rest of the year, for estimated new revenues of $90 million.

-- A permanent 8 percent sales tax on meals and lodging, with one-third of revenues to support the Marketing Maine Trust Fund, for additional revenues of $30 million.

-- An extension of the sales tax base to include amusement and recreational services such as golf, skiing, bowling, theater tickets and amusement parks, for additional revenues of $20 million annually.

-- Better collections of sales taxes for online purchases, for additional revenues of $20 million.

-- An increase of the real estate transfer tax from 0.44 percent to 1 percent, which would be offset by a 50 percent tax credit on the first $200,000 of the sales price of homes used as primary residences. That would generate an additional $20 million a year.

As an alternative to those elements, Cutler proposes a permanent increase on the sales tax rate from 5 percent to 6 percent, including better taxation of online sales, which he estimates would be worth about $180 million annually.

Sen. Richard Woodbury, I-Yarmouth, who is an economist by trade, prepared an impact analysis of Cutler's plan that shows property tax cuts would vary from 5 percent on a $500,000 home in a community with a high property tax rate to 35 percent for a $50,000 home in a community with a low property tax rate.

Cutler will have to sell his plan aggressively if history is any indication. In 2009, the Legislature enacted a tax reform package that included lower income taxes and higher and expanded sales taxes, as well as the meals and lodging tax. That proposal was repealed by citizen initiative in June 2010 with approximately 60 percent of voters deciding against it.

Woodbury was also one of the leaders of a "Gang of 11" tax reform package last year that failed to gain enough support for enactment.

___ (c)2014 the Bangor Daily News (Bangor, Maine) Visit the Bangor Daily News (Bangor, Maine) at www.bangordailynews.com Distributed by MCT Information Services

[ Back To TMCnet.com's Homepage ]