LePage's effort to raise, expand sales tax to pay for income tax cut faces opposition

Government And Institutions Associated Press

Lawyers, accountants, camp directors and others whose customers would be newly taxed under Republican Gov. Paul LePage's budget plan told lawmakers on Monday that the proposal would drive away business and hurt their bottom lines.

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LePage wants to raise the sales tax from 5.5 percent to 6.5 percent and expand it to include more services and dozens of new items, such as movie theater tickets, summer camp tuition, dry cleaning and amusement parks. The sales tax would help pay for significant cuts in the personal and corporate income taxes and elimination of the estate tax and the tax on military pensions.

The commissioner of the Department of Administrative and Financial Services, Richard Rosen, told the Legislature's Appropriations Committee that the governor's tax overhaul proposal would shift more of the burden onto tourists and provide better stability to state revenues.

The state's current tax structure is out of date, he said, noting that people pay sales tax to watch movies if they buy or rent DVDs at stores but not when they go theaters or stream them over the Internet. But he acknowledged the political challenge the proposal faces.

"The status quo may be comfortable, but it is also an impediment to future economic growth," Rosen said.

But Peter Hirsch, director of Camp Androscoggin, a summer camp for boys in Wayne, said taxing tuition will cause his customers to choose to go to camps in other states instead.

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Meanwhile, Andrew Cashman, a lobbyist for the Theatre Owners of New England, said that taxing movie tickets will cause sales to plummet.

"The economic impact of this is quite severe," he said.

The Appropriations Committee will continue to negotiate behind closed doors and listen to public comments on various pieces of LePage's budget for the next several weeks.