Area business leaders back local sales tax

BANGOR – A plan to adopt a local sales tax gained some newfound allies Tuesday, with the region’s business leaders vowing to back the latest incarnation of the bill as a means of paying for a new Bangor Auditorium and Civic Center.

“As a businessman, when someone starts talking about new taxes I look the other way,” Bangor automobile dealer Jack Quirk Jr. said during a news conference announcing the Bangor Region Chamber of Commerce’s unprecedented support for the proposal. “But, in the long run, the local option tax is the best way to handle this need.”

Renamed the Debt Avoidance Act – admittedly to avoid the “new tax” stigma, supporters say – the bill is headed to the Legislature’s Taxation Committee next week.

The legislation would allow a municipality, subject to voters’ approval at a local referendum, to impose up to a 1 percent sales tax on items and services purchased there. The revenue would then be used to fund projects of regional significance as approved by state development officials.

In Bangor, officials are eyeing the revenue to replace the 47-year-old Bangor Auditorium with a $30 million facility at Bass Park. The 1 percent tax would generate between $6 million and $8 million for the city each year, officials estimate.

While past proposals have died often quick deaths in committee, the current plan seems to be gaining support from its past opponents, with the Maine Municipal Association and Gov. Angus King working toward the bill’s passage this year.

Supporters say Tuesday’s endorsement from the chamber, which represents 850 businesses in 21 communities, gives the bill some much needed support from the business community, which has traditionally frowned on the local tax. Opponents say it would disproportionately benefit urban areas and create unfair competition between businesses in neighboring towns.

“The strongest argument against it has come from business … and that can’t hold up with the safeguards in this bill and [the] Bangor chamber endorsing this,” said the bill’s sponsor, Rep. Joseph Perry, D-Bangor.

“If this is going to happen, it’s going to go this year,” continued Perry, who praised the city and the newly formed Service Center Coalition, a group of larger municipalities from throughout the state, for advancing the issue.

To help head off opponents’ concerns, the current bill limits the local tax to five years or until the project is paid in full, whichever comes first. After the expiration of the tax, a municipality could not ask voters to approve another tax for three years.

The plan also allows a municipality to cap the local tax on big-ticket items, such as cars, applying the tax only to the first $5,000.

Under the proposal, 88 percent of the revenue from the local tax would return to the municipality for the capital project. About 5 percent would go into the state’s revenue sharing fund and 3.8 percent to regional economic development projects. The remainder would go toward administrative costs and promotion of local businesses.

Safeguards or not, the plan still has its fair share of opponents, including the Kennebec County Chamber of Commerce and the Maine Merchants Association, officials from which on Tuesday blasted the renamed proposal and objected to a new tax in one of the highest-taxed states in the nation.

“If you’re the number one taxed state in the country based on ability to pay, raising taxes, no matter how lofty the goal, is inconceivable,” said the association’s executive vice president, Jim McGregor. He added that the new tax would complicate matters for local merchants, already burdened with the task of collecting sales tax for the state.

But Sen. Tom Sawyer, R-Bangor, said he didn’t see the local tax as an increase but a means of giving municipalities more control over how sales tax revenue – historically allocated at the state level -is spent.

“This unties the hands of municipalities,” Sawyer said Tuesday. “Augusta is not infinite in its wisdom in that regard.”