expanding sales taxes
On May 1st, a bipartisan group of Maine lawmakers released a plan to both raise and expanding sales taxes in the state. These extra revenues would be used to reduce the state income tax rate and provide tax relief to Maine homeowners.
Under this new law, Maine would raise its sales tax from 5 to 6 percent. It would also expand the taxable base to more services and products. Items like groceries, haircuts, cooking and heating oil, and funeral services would all become taxable. Nearly all consumer purchases would be taxed under this law, with a few exceptions for education and healthcare purchases.
In exchange, this bill would cut the state’s maximum income tax rate for individuals down from 8 to 4 percent. It lowers the corporate tax rate down from 8.93 percent to 7.5 percent and removes Maine’s estate tax. This bill also raises the state’s homestead exemption from $10,000 to $50,000 so Maine homeowners would owe less in property taxes.
Lawmakers will review this bill extensively over the next few weeks until the current legislative session ends in June. Republican Gov. Paul LePage is unenthusiastic about this new plan, so lawmakers need to win him over before any changes will go into effect.
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