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Paul Davis

More Taxes for the 4th of July?
By Senator Paul T. Davis, Sr.
Jul 8, 2004 - 11:54:00 AM

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As we celebrated the birth of our great nation last weekend, some things took effect in Maine State Government that you might or might not know about.

On July 1st, Maine's gas tax increased automatically. You now pay 25 cents in state taxes per gallon of gas you pump into your car. This tax increase was the result of a law the Democratically controlled Maine Legislature passed a few years ago that allows the state to increase the gas tax automatically based on the rate of inflation. Since this law was enacted, Maine gas taxes have increased by almost 12%. While the market price of gas goes up and down, currently it is going down, the tax once in place never goes down. If you want to know how your legislator voted on this issue contact me, or simply go to:

Another new policy that was recently enacted by our Legislature and signed by the Governor, forces our hospitals to pay a "sick" tax to the state. This tax, better known as the "tax and match scheme," is designed to gain a 2 to 1 match when this tax is reported to the federal government. This scheme was originally implemented in the early nineties and eventually was discontinued after the federal government got wise to it. If the federal government did not like it in the nineties then I cannot fathom why they would think it acceptable now.

The other folks that don't like the "sick" tax are our rural Maine hospitals. This new tax will severely impact the Millinocket Hospital, the Dean Hospital in Greenville and Mayo Hospital in Dover-Foxcroft. These hospitals, and the others throughout the state, will now have to send enormous tax checks to the state with the hope that they will get most of it back when and if the federal government decides to honor the match. What will happen if the match does not come?  One thing is certain, this new policy threatens your access to healthcare. Our hospitals, especially in rural areas, are teetering on the brink and this new state imposed tax and match scheme threatens their very existence. These hospitals are critically important to the structure of our communities. The Legislature needs to recognize their importance and not merely view them as potential cash cows.

Last week it was announced that Maine's small businesses, those with incomes of less than $10,000, will no longer be allowed to purchase the raw materials and goods they need without paying sales tax on those goods up front. Prior to July 1st, these businesses were allowed to purchase the materials without paying sales tax because they were purchasing these goods for resale. The government gets the tax revenue when the final product is developed and sold. Now, however, these businesses will be required to pay sales tax on these goods up front and at the end of the year will be reimbursed by the state for the taxes paid. For example, if you make baskets and sell them at craft fairs, you will now have to pay a sales tax on the materials you use to make the baskets. You can then apply for a rebate on the tax when you sell your baskets and collect tax on the sale. At best, this means you have loaned the state your hard earned money. While this may not seem significant to many, this imposes another undue burden on Maine's struggling small businesses. Their profits margins are already small as it is. Now they will have to have their money tied up awaiting sales. This may spell doom for many of our rural, small businesses. I want any small business owner to feel free to call anytime about this issue.

Maine is the highest taxed state in the United States. Unfortunately, this burden was made considerably heavier on July 1,2004.

The Democratic Party has controlled Maine's Legislature for the better part of the last 30 years. Clearly, it is time for new leadership in Maine. If the examples I cited above don't convince you then consider these: Maine has lost more manufacturing jobs than any other state in the nation; Maine's tax burden is the 2nd highest in the nation; Maine ranks at the bottom in terms of its businesses ability to grow, prosper or survive; our young college educated citizens are leaving the state in droves seeking economic opportunity; Maine citizens pay some of the highest health insurance premiums in the country; and soon, 1 in 4 Mainers will be enrolled in the state's medical welfare program, Medicaid.

Any questions?

Paul Davis is the Maine Senate Republican Leader.

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