Revenue-sharing better than local sales tax

Nov 29, 2018

There has been discussion on and off for years about whether municipalities should be able to charge their own sales tax to offset the costs of providing public services.

This raises two questions. One is how did we get to the point of needing this, and the other is whether it is a good idea.

In the past, the state shared 5 percent of sales taxes collected in municipalities with the town or city to offset the cost of providing services. This benefited service centers in particular. Rockland, for example, is a service center. It has a small residential population and several nonprofits and government agencies occupying key pieces of property while providing no property tax revenue. These agencies provide services to the wider Midcoast community.

Over the past decade, state government under the leadership of both a Democratic governor and a Republican, has raided revenue-sharing dollars, taking $700 million. The result was to shift the tax burden to local governments and property taxpayers. This was also driven by the state's failure to provide adequate aid for schools.

And of course there are arguments, some of them valid, that all levels of government could also enact cuts to live within their means and reduce tax burdens.

On the whole, however, our town and city governments provide very essential services -- plowing roads, for example -- while keeping costs down. Most of your property tax increases each year are due to the school budget.

The question then arises as to whether allowing municipalities to charge a local sales tax of up to 1 percent could be used to help local governments continue to provide needed services. These sales taxes would likely target visitors to the area on items such as lodging and meals.

The greatest drawback to the local sales tax idea is that it would pit the communities against each other. If Rockland had a local sales tax and Thomaston did not, Rockland business owners might have that much more of an uphill battle in keeping the lights on. And how would Midcoast towns fare competing with the big service centers, such as Bangor, Augusta and Portland?

We want to encourage visitors to come to the area, rather than hurt the tourist trade. More importantly, too often high prices aimed at tourists end up creating collateral damage among local residents struggling to get by.

We have new leadership in Augusta, and we think they might be open to restoring at least some of the revenue-sharing dollars the towns have lost. That would offer a level playing field and help local governments without creating town vs. town trade wars.

We would urge municipal leaders, local lawmakers and the Maine Municipal Association to fight hardest for restoration of revenue-sharing before seeking a local sales tax. In general, we should always think long and hard before creating any new taxes.

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