AUGUSTA – Lawmakers took aim at Maine’s tax on business equipment Friday with the House of Representatives approving a repeal-like measure by a vote of 123-18. In preliminary voting, the Senate followed suit, 34-0, and then set the measure aside for a final review.

The proposal, backed by Gov. John Baldacci and strongly endorsed by the Taxation Committee, would exempt new equipment installed after April 1, 2007, from local personal property taxes.

Personal property already registered in the state’s decade-old business equipment tax reimbursement program would remain taxable by municipalities. Businesses still would be eligible to have tax payments reimbursed by the state.

Storefront retail property also would remain taxable and eligible for reimbursement.

The measure also envisions additional state aid for municipalities with high tax burdens.

Taxation Committee Co-chairman Richard Woodbury, the independent representative from Yarmouth, said a broad exemption from personal property taxes would “remove a substantial disincentive” for business investment in Maine.

Removing property from the tax rolls would also ease business fears about potential cutbacks in the BETR program, said Rep. Harold Clough, R-Scarborough, another member of the Taxation Committee.

“It’s very important that we stabilize this,” Clough said.

A third Taxation Committee member, Democratic Rep. Deborah Hutton of Bowdoinham, said the measure might have been the best compromise that the panel could produce but that it still fell short of “real comprehensive tax reform.”

Democratic Rep. Joanne Twomey of Biddeford was even more critical, deriding the proposal as “nothing more than a tax shift” benefiting businesses at the expense of municipalities and property tax payers.

Enactment by the House and Senate would punctuate years of debate.

Business groups have enthusiastically favored an end to the business equipment tax as a spur to investment while municipal officials have warned that an erosion of the local tax base would push more of a burden onto residential property tax payers.

“It is at least a partial victory for retailing,” Jim McGregor of the Maine Merchants Association said in a statement. “We live to fight another day. … We obviously will have to continue to fight each year to make sure the business equipment tax reimbursement program [BETR] is funded, and it clearly will be more difficult to defend with retailing the only sector remaining eligible for reimbursements.”

Curbing the tax liability of businesses has been a subject of debate within the Taxation Committee for the entire two-year legislative session.