Republican radio address

For the weekend of June 12-13, 2009

Greetings, this is Josh Tardy, leader of Republicans in the Maine House.

Any Mainer who thinks the Legislature is smart enough to learn from serious mistakes should have been in the State House Thursday night. Last year, the majority Democrats jammed through a bill in the final hours of session to raise the tax on beer, wine and doctors’ bills. The bill went through late at night without a public hearing, without a work session and with no time for weary legislators to even read the document. It was an outrage, and the voters agreed. In a people’s veto last November, they repealed the new tax by a two-to-one margin. It was such a stinging defeat for the Democrats that you might think they would remember.

Evidently they forgot, because Thursday night was like déjà vu. With just hours left in the legislative session, a 33-page bill was dropped on our desks. Six minutes later we were voting on it. It was a rewritten version of a bill that passed a week ago – the infamous lift-and-shift tax overhaul that expands the sales tax to scores of services and thousands of companies and drops the income tax rate.

Once again, the bill was rammed through before legislators even had a chance to read it. Obviously there were no public hearings, no work sessions and no opportunity for the taxpayers of Maine to weigh in. It was a pure power play by the Democrats, who had been working on this new bill behind closed doors for the past few days with no Republican involvement. They knew what they were getting when that huge new bill dropped in on their desks , but Republicans had only heard rumors. For most of this session, there has been bipartisan cooperation and transparency as all legislators pulled together in the face of our immense fiscal crisis. It was sad to see that spirit crushed by a majority party determined to get its way.

This is democracy at its worst, when one party so totally dominates in numbers that the minority party is brushed aside like a nuisance. It’s even more disturbing when the minority party has strong and convincing arguments against the bill. When these arguments are advanced in floor debate, they are completely disregarded by legislators on the other side of the aisle, who seem programmed to reject anything that conflicts with their party line.

I was profoundly disappointed in Governor Baldacci. This tax overhaul had been developing in the Legislature for the last few months. If he had problems with it, there was ample time to sit down with legislators and hammer out solutions. Unfortunately, he waited to the very end of the session to get involved. It’s not like this was a minor bill. It’s the most revolutionary change in Maine taxes in 40 years. Most chief executives would have been intimately engaged in such an important undertaking. But he didn't even seem interested until the original bill had already passed. Only then did he shift into gear, saying the bill needed some changes before he would sign it.That’s when the Democrats went back to work, emerging Thursday night with their new bill, LD 1495.

Earlier in June, the original tax reform bill, LD 1088, passed the House without a single Republican vote. Legislative Republicans remained solidly against the new version as well, right to the end. We recognized that there could not be a worse time to revamp Maine’s tax system than right in the middle of the worst financial turmoil since the Great Depression. We knew that trying to predict state revenues in that kind of environment would be next to impossible. It would be even more difficult when trying to predict consumer behavior as folks confront a new sales tax on practically everything, from car repairs to boat mooring to house cleaning.

Republicans have advocated lower income tax rates for years, so you know this bill must be badly flawed when we oppose it. Let me be clear: This tax shift is not a good deal for Maine. It raises taxes on tens of thousands of Maine families and creates additional burdens for small businesses now hanging on grimly in the face of economic stress. It flies in the face of the often-stated goal of ensuring a better business climate for small companies. At a time when we are experiencing job losses at an alarming rate, it is almost inconceivable that Democrats would vote to raise taxeson many small businesses who tell us these new taxes threaten their survival.

It also will be very hard on older residents living on fixed incomes. They will get limited benefit from an income tax reduction because most of them pay little income tax to start with. But their tax bracket will no climb to 6 percent. At the same time, they will feel the full bruntof an additional sales tax on the small pleasures they enjoy, such as restaurant meals, where the tax rate jumps from 7 percent to 8.5. The same rate now applies to lodging, so we will put the squeeze on tourism, our largest industry.

The tax overhaul now forced on the people of Maine skews the benefits towards the well-heeled. Gone from the first version are sales taxes on ski lift tickets and golf greens fees. Gone also is the higher real estate transfer tax on houses selling for more than $500,000. But the sales tax on auto repairs is still there. Look at it this way. This is great for people living in $700,000 houses who drive their new Lexus to their condo at Sugarloaf. But it’s not so great for Joe Six-pack who’s just trying to keep his old car on the road. He might be Joe Five-pack once this tax increase kicks in.

Republicans tried to stop this bill but faced with a Democratic majority, we were unable to prevail. Now we will all have to live with this dismal result.

This is Josh Tardy. Thank you for listening.