Maine businesses got more than they could have hoped for even if it wasn’t all they requested in the elimination of the business-equipment tax approved by the Legislature’s Taxation Committee this week. As important, the Legislature got over a hurdle it had failed to clear for a decade. The achievement was an indication of legislative competence that should be encouraged.

The current state-local reimbursement scheme for business-equipment tax is complicated; the reform simplifies the process for most businesses but creates a couple of complications of its own. For nonretail businesses currently eligible for the Business Equipment Tax Reimbursement (BETR), LD 2056 prospectively repeals the tax.

For retail, the current tax-and-reimburse scheme remains in place – its presence is a benefit to communities, which would not need to rely on the state to cover the lost local revenue. The state would, however, provide on a diminishing scale revenue lost to the locals from the other businesses, dropping over five years to the constitutionally mandated 50 percent reimbursement level.

Business has said for years it wanted the elimination of this tax, even to the extent that it would surrender the double dip some businesses achieved through getting reimbursed for a tax from which local government had already exempted them. But this year, it asked for something in addition: an extension on BETR, which lasts for

12 years, after which most equipment is largely depreciated except in some industries such as paper. The compromise bill from Taxation now provides an additional six years for partial reimbursement.

Communities too received consideration, with added revenues for towns and cities especially reliant on the tax and added funding through the state Revenue Sharing II program to help service centers. Towns have been nervous for years that replacing the local tax with a promise of compensation from the state would end up providing them with neither, or at least no more than half the lost revenue. The structure of the bill gives them greater assurance by funding the reimbursements “over the line” – directly from a revenue source, in this case, the income tax, rather than through the General Fund.

Legislators are to be commended for sticking with difficult negotiations to produce a solid bill. Gov. Baldacci too made this a priority. And Maine should benefit by inching up the business-friendliness scale.