Tax Policy

Background

Stability and certainty are important factors in seeking capital for mill improvements, and investment is the key to survival for Maine’s mills.

Maine has greatly improved its tax policies in recent years with adoption of the BETR program that reimburses manufacturers for personal property tax on equipment installed from 1995 to 2007; the BETE program that exempts from personal property tax manufacturing equipment installed after 2007, and the TIF program that allows municipalities to offer financing incentives for investment funded through a manufacturer’s property tax. These policies have encouraged investment in Maine mills, and helped keep Maine mills competitive.

Maine, like most other states, exempts from sales taxation materials used in the manufacturing process to avoid tax pyramiding.

Despite the recent improvements, Maine paper manufacturers still pay much higher property tax in Maine than they do in many other states.

Legislative Issues

MPPA urges the Legislature not to reduce BETR reimbursements as a means to close the budget gap. This will lead to uncertainty and reduced investment, ultimately making the budget situation worse in future years, and hurting Maine jobs and papermaking families.

If elimination of sales tax exemptions or broadening of the sales tax base are considered, care should be taken to avoid taxing products used in the manufacturing process, as such taxes get multiplied many times over as value is added to a product. Many sales tax exemptions were established to alleviate previous problems or competitiveness issues with other states.

The BETE law passed in 2006 should be given time to work. It will not only encourage investment as economic conditions allow, but will reduce the state’s cost of the BETR program.