ANGLING FOR A TAX BREAK

At a time when the state is trying to collect unpaid sales tax from Maine residents and businesses and lawmakers spend endless hours fretting about property taxes, it makes no sense to allow an out-of-state business to operate here without collecting the required taxes. If outdoor retailer Cabela’s Inc. wants to open a store in Maine, it should follow Maine law, not ask for special treatment.

Representatives of Cabela’s, which is based in Nebraska, have told state officials the company will scuttle plans to build a 130,000-square-foot store in Scarborough if it is required to collect sales tax on catalog and Internet purchases by Maine residents. Cabela’s says it receives about 165,000 catalog orders from Maine annually, worth around $10 million. Charging sales tax on those purchases would add $500,000.

The company has a record of targeting small and economically depressed communities willing to offer large incentive packages for a Cabela’s store, which daily draw thousands of tourists with their stuffed animal displays and aquariums. Buda, Texas, for example, spent $40 million on infrastructure improvements. A developer donated a 40-acre parcel for a store in Lehi, Utah.

Although the inducement it seeks from Maine is small, the company may be worried about the precedent that would be set if more states start requiring it to collect sales taxes on non-store sales.

Cabela’s, because it does not have a store here, currently does not charge sales tax on catalog and Internet purchases by Maine residents. Companies that have stores in Maine, like L.L. Bean, the Gap and Pottery Barn, must charge sales tax when Maine residents order items from a catalog or Web site.

Cabela’s argues that it should be treated differently because its catalog, Internet and retail stores are separate corporations. However, items ordered from its catalog or Web site can be returned at a retail store and it collects sales taxes from Nebraska customers who order online or by phone.

Granting Cabela’s request would simply allow the company to sell similar merchandise 5 percent cheaper than competitors already located in Maine. More, it could encourage other companies to ask for the same treatment, which would cost the state much more revenue than Cabela’s would generate and would shift some of the tax burden to state residents.

The federal government estimates that Maine loses between $30 million and $100 million in taxes from shoppers who make purchases out of state. Through a media campaign and letters sent to high-income earners and businesses that have declared little if any use tax in recent years, the state hopes to collect a portion of the lost revenue.

Although Cabela’s currently does not charge sales tax on catalog and Internet purchases by Maine residents, they are paying at least a portion of that sales tax through the use tax, which typically totals 0.04 percent of adjusted gross income.

If the company were locating in Brewer or Machias, the decision may be more difficult, but southern Maine is already teeming with stores and traffic so the need for another attraction and employer is less acute. If the company wants to locate in Maine, it should collect and pay Maine taxes.