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Room 332, State House
2 State House Station
Augusta, Maine 04333-0002

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For Immediate Release

Date: 04/26/13

RFC Report Underscores Flaws in Part II of Dems' Tax Hike Package

Republicans focused on balancing budget, letting businesses breathe

AUGUSTA - The Revenue Forecasting Committee (RFC) today reported that state tax revenues are projected to be roughly $60 million less than anticipated for the upcoming biennial budget. The downward projections stem from lower than anticipated sales and corporate tax revenue, signaling a strained business community.

Dr. Michael Allen, Associate Commissioner for Tax Policy at Maine Revenue Services, cited uncertainty at the federal level, high energy costs, and payroll tax increases that reduced Maine families' purchasing power as reasons for Maine's weak business climate.

This comes on the same day as Democrats rolled out Part Two of their Massive Middle Class Tax Hike Package. Proposals include increasing the sales tax from five to six percent, the lodging tax from seven to 12 percent, and more. This portion of the Democrats' Tax Hike Package would impose tax increases on all Mainers in excess of $300 million per year. Part One of the package, unveiled Tuesday, targets the rich. The most punitive of these measures, LD 1256, would roll back income tax cuts for all Mainers earning over $100,000 per year, raising $25 million per year, or only 5.7 percent of the biennial budget shortfall.

"What this report tells us is that Maine's economy is crying out for breathing room," said House Republican Leader Ken Fredette (R-Newport). "When economic activity is lower than expected, raising tax rates only compounds the underlying problem, which is that Mainers need more money in their pockets to spend at Maine businesses, not less. Raising the sales and income taxes would make bad news worse."

"We must focus on reducing government overspending at all levels—state and local—if we are to prevent massive tax hikes on Maine's middle class that ultimately hurt local businesses," said Assistant House Republican Leader Alexander Willette (R-Mapleton). "We're hoping that local leaders will help us trim government spending at all levels so that we can keep more money in the private economy and reverse the trend we're seeing in the RFC report today."

Today's revenue report also comes on the heels of votes on the House floor by Democrats to increase spending at the Department of Health and Human Services (DHHS) by $42 million over the next four years.


David Sorensen
Maine House Republicans
Tel: (207) 205-7793