Opponents of the business equipment tax in Maine have a lengthy argument on why a state rebate for property tax combined with a local exemption of the tax does not constitute, in legislative jargon, a double dip. But of course it does, and the fact that some companies are willing to surrender that small windfall for the stability of getting rid of both the tax and the tax exemption should provoke lawmakers to act.

The double dip exists in this form: When a city offers a business tax-increment financing (TIF), it is, for a specified time, providing a tax exemption for a new or expanded business. This can be quite a good deal to a municipality – it gets jobs it might not otherwise and the state still assumes it has a lower valuation level for school funding.

The tax exemption means the municipality refunds a business’ tax bill – one dip. The business then submits that tax bill to the state, which offers its Business Equipment Tax Reimbursement (BETR) and the business is reimbursed on the same bill again – a double. For a few companies, that can be worth hundreds of thousands of dollars or more. The Maine business coalition opposed to bills that restrict the double dip says, “To help level the playing field, it is necessary for companies to use both TIF and BETR.”

But against states that have no business tax at all, of course, Maine has not only leveled the playing field but tilted it in favor of the home team. Given the added costs to businesses in Maine – energy, labor, taxes, distance from markets – that subsidy may be entirely necessary and beneficial, but to call it anything like sound policy is wrong. Maine needs to bring down taxes and seek less expensive energy sources, making such a subsidy superfluous.

Meantime, the double dip comes in for assault every legislative session, with more hearings on BETR slated for today. Businesses do not like this and they should not have to put up with it – if Maine has learned anything in the last decade, it is that its poor business climate is caused in part by regulatory uncertainty. In response, there is a deal on the table.

The deal phases in a business-equipment tax exemption, excluding equipment that did not qualify for BETR – equipment placed in service before April 1995 – and keeping in BETR the equipment currently in the rebate program on a 12-year depreciation schedule. That leaves the double dip in place for only a limited and diminishing amount of equipment but, presumably, gives businesses the tax predictability they should have. As for municipalities that could lose revenue, the proposal would help in a limited way by shifting money to counties and relieving local property-tax burdens.

The governor plans to introduce this phased-in approach later this session. Other bills with a similar aim are being introduced now. The nuances among them are important but the overall goal of any that passes is to move the state out of collecting the business-equipment tax and toward greater stability and a greater ability to compete for Maine businesses.