He notes that the finance, insurance, and real-estate services sales tax exemption cost the state $313 million in fiscal year 2013. By fiscal year 2015 this number is expected to increase to $337 million in foregone receipts. But because the Legislature raised the sales tax from 5 percent to 5.5 percent, effective October 1 (sun-setting in 2015), the cost of the exemption/expenditure/break will likely be considerably higher.
Higher-income people tend to benefit most from this exemption, whereas lower-income people tend to be hit hardest with a sales-tax increase.
The task force will also develop an evaluation process for how well tax breaks work. The state has handed big corporations large chunks of cash simply on their promise of creating jobs — without gathering information on
The Tax Expenditure Review Task Force, which had its first meeting this month, includes lawmakers, economists, and representatives of the business community. It will report to the Legislature in December.
In case readers want to come up with suggestions, the state tax bureau’s convenient listing of breaks is at maine.gov/revenue/research. The bureau plans to issue an updated report in the first week of October. The task force’s next meeting is on September 30 at 9 am, in Room 127 of the State House.
Cutting tax breaks with a business-oriented, Tea Party governor in the Blaine House, of course, will be especially difficult. But the Legislature this year overrode his veto of the budget. Johnson believes there might also be some bipartisan taste in next year’s legislative session for reducing tax breaks.