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The Associated Press June 9, 2010, 4:20PM ET

Vote doesn't mirror Mainers' desire for tax reform

At least four times in the past six years, Mainers have voted against statewide referendums that promised to cut taxes and harness government spending.

Voters did it a fifth time Tuesday by repealing a legislative tax code overhaul that supporters said would lower the overall tax burden. But observers agreed Wednesday that the vote doesn't mean residents are against tax reform in general.

Mainers like to talk about tax reform "in the abstract, at the 1 million-foot level," said John Mahon, the business dean at the University of Maine who teaches strategic planning and public policy.

"But when you start talking, 'Well, OK, here's what we're going to do about tax reform,' that's when people start stepping away: 'Whoa, that's not what I meant by tax reform,'" Mahon said. "What happens is you start dividing constituencies and stakeholders into a thousand different groups, and they can't agree."

Residents and politicians for years have talked about the need to bring down taxes in Maine, which is consistently rated as one of the highest-taxed states. But lawmakers and voters have failed to agree how best to accomplish that.

With a 61 percent to 39 percent vote, Maine residents on Tuesday repealed a tax reform package that would have lowered the state's income tax rates in return for broadening the sales tax to dozens of previously exempt items and raising the meals and lodging tax.

Supporters of the tax law, which the Legislature passed last year, said it would lower the overall tax burden on Mainers because much of the tax burden would be shifted to tourists who would pay more in sales taxes for their meals, lodging and other items they purchase while visiting.

But opponents said the law would hurt Mainers by adding new taxes on scores of everyday purchases ranging from movie tickets and car repairs to sports tickets and even rounds of miniature golf.

Sen. David Trahan, a Waldoboro Republican who favored repealing the tax package, said lawmakers need to look at a different model on how best to reduce taxes in Maine. Last year's tax package was complicated and full of "gimmicks and unintended consequences," he said.

Any future tax reform efforts should focus on a combination of economic development and government spending. Growing the economy will bring in more revenues, but rather than spend the extra money the Legislature needs to use it to cut income taxes, he said.

"I think it's time to look at other ways to do this," he said.

Sen. Joe Perry, a Bangor Democrat who is chairman of the Senate taxation committee, thinks politics was the driving force behind Tuesday's defeat of the tax reform law - not whether it was good policy.

He's counting on Republicans to come up with a palatable reform package of their own. Every year without tax reform puts Maine at a further competitive disadvantage with other states, he said.

"We've been over 40 years without an overhaul while every other state in the nation shifts their tax burden exactly the way we tried to," he said.

But Rep. John Piotti, the House Majority Leader who helped craft the tax package that voters overturned, said it's unlikely the Legislature will take up a new tax reform package when it convenes in January. Tax reform, he said, has proven to be a hard sell on Mainers.

"Change is tough, and this was a major change," said Piotti, a Democrat from Unity.

In the end, voters repealed the tax reform law because they didn't believe it would cut down on their taxes, said Charles Webster, chairman of the Maine Republican Party who favored repealing the law. Webster said people he talked to felt the government was simply trying to get more money from them.

Tuesday's vote, he said, was a vote against the Legislature, which voted for the tax reform package.

"This was a repudiation from the voters - people who cut hair and drive trucks, people who are plumbers, people who paint cars, regular working-class people - that they've had enough," Webster said.

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