Tax Issues

Throughout its history MPPA has successfully promoted legislation to provide sales tax exemptions for Maine manufacturers, limit Maine income tax, and lower the State’s burdensome property taxes. A few examples of this success include:

• In 1995 MPPA initiated legislation that led to the creation of the BETR program. Designed to achieve better parity with States that do not impose a tax on personal property, this program requires that the State reimburse taxpayers for 100% of personal property taxes paid on qualified business equipment (nearly all equipment at paper mills and cogeneration facilities) placed in service after April 1, 1995.
• The BETR program reimburses Maine’s manufacturers approximately $70 million per year, an amount that does not go unnoticed by lawmakers when state budgets are tight. MPPA has led the grassroots efforts every year to protect the BETR reimbursement level at 100%. Although not always successful, reimbursement has never dropped below 90%, even with the State’s budget difficulties in 2009 and 2010.
• In light of the continuing attacks on the BETR program, and uncertainty over its long-term existence, MPPA led a business coalition and coordinated legislative and grassroots activities that led to enactment of legislation to eliminate personal property tax on new equipment placed into service after April 1, 2007. This legislation keeps in place the full funding of BETR for equipment currently in that program, and extends indefinitely reimbursements for taxes paid on this equipment.
• One of MPPA’s first legislative successes was passage of the Maine Tree Growth Tax Law, which provides assessment of land value according to its current use rather than the highest or best use.
• MPPA successfully defeated or modified several bills to reduce or eliminate existing sales tax exemptions that currently allow manufacturers to avoid pyramiding costs that could amount to millions of dollars per company. The tax reform bill, passed by the legislature but later overturned by Maine voters, was carefully drafted in consultation with MPPA to avoid increasing sales tax on Maine manufacturers.