Worry over excise tax question
By David Harry
Staff Writer
Depending on who is asked, passing a law to reduce vehicle excise tax will either hamper town services or help Maine prosper.
Officials in Scarborough, Cape Elizabeth and South Portland said they are concerned a loss of revenue will force budget cuts in road maintenance.
Chris Cinquemani, the director of communications for Maine Leads, the “nonprofit, non-partisan action and advocacy group” that authored ballot questions 2 and 4, said passing Question 2 is a way to reinforce the need for government to curb spending.
Question 2, if passed, will reduce the excise tax on vehicles at varied rates from the current mill rates assessed by the state.
New vehicle owners are currently assessed $24 in taxes for every $1,000 of the manufacturer’s suggested retail price when registering a vehicle. In the second year, the current rate decreases to $17.50 per $1,000, and $13.50 per $1,000 in the third year.
Four-year-old vehicles are currently assessed at $10 per $1,000, and the rates decrease to $6.50 in the fifth year before settling at $4 at year six and on.
Question 2 will reduce the excise rate to $12 per $1,000 of the MSRP in the first year, to $8 per $1,000 in the second year, and to $4 in the third and ensuing years.
If passed, Question 2 will also eliminate the state 5 percent sales tax and the first three years of excise taxes for hybrid vehicles, those getting more than 40 miles per gallon highway mileage or powered by hydrogen or fuel cells.
Reducing and eliminating those taxes creates a market-based incentive for consumers, said Cinquemani.
Cinquemani said Question 2 will save Mainers an average of $800 over five years in excise taxes and provide an impetus to buy new vehicles and boost the state economy.
An organization that could see its members get a boost by passage of the question is the Maine Auto Dealers Association. According to its Web site, the association is comprised of 134 new car dealers, but association president Tom Brown said no official position has been taken on the referendum question.
“MADA does not get involved with referendum questions,” Brown said.
Brown said buying a vehicle is a complex process with consumer decisions based on factors including economics, family needs and commuting distances.
“Excise tax can be a major component,” Brown said. “Some customers would weigh this in selecting a vehicle.”
Brown said he did not have specific statistics on how many hybrid vehicles have been sold in Maine over the last several years, but said sales had increased as more manufacturers offer them in a range of sizes and styles.
Cinquemani said he was not surprised by the opposition government officials have had to Question 2, but said potential revenue decreases could be offset by increased sales of new vehicles taxed at a higher rate than the vehicles now driven by Mainers.
“It’s simple economics. When something costs less, people buy more of it,” he said.
Hall said he doubted increased sales could fully alleviate Scarborough’s projected loss of $1.5 to $1.6 million in excise tax revenues, and statistics compiled by the town show new vehicles would account for an anticipated $642,000 of the $4.1 million in excise tax the town expects to collect this year.
Excise revenues from vehicles at least six years old are projected to be more than $1.1 million.
Hall said the town expects to pay $2.8 million for road maintenance this year, and he anticipates a second year revenue loss of $2.6 million is Question 2 passes.
In South Portland, Finance Director Greg L’Heureux estimated a loss of $1.5 million in excise tax revenue if Question 2 passes. L’Heureux said the $4.3 million in anticipated revenue comprises more than 15 percent of total municipal revenues not including the schools.
The money pays for operations, equipment and salaries associated with road maintenance that total about $4.4 million.
L’Heureux added the revenue losses on newer cars could be steep because the city has been successful in getting Enterprise Rent-A-Car to register its vehicles in the city as opposed to Saco or Portland.
L’Heureux said the increased revenue has made it hard to determine how excise taxes have fluctuated over the last several years because of a poor economy. In Scarborough, vehicle excise taxes accounted for $4.2 million in 2008, $4.41 million in 2007 and $4.22 million in 2006.
In Cape Elizabeth, the Town Council and School Board have endorsed voting no on the question, citing a projected $758,000 loss from about $1.69 million in excise tax revenues.
In the resolutions, the boards said the losses could lead to a property tax increase of 57 cents per $1,000 of assessed value of property.
Hall said voter approval of questions 2 and 4 could be especially difficult as he envisioned any increases in property taxes needed to offset decreases in excise tax revenues would exceed the cap created by the Taxpayer Bill of Rights and become subject to voter approval.
Voter choice is the intent of both bills, Cinquemani said.
“It keeps the promise of creating tax relief,” he said.
Staff writer David Harry can be reached at 282-4337, ext. 219
Staff Writer
Depending on who is asked, passing a law to reduce vehicle excise tax will either hamper town services or help Maine prosper.
Officials in Scarborough, Cape Elizabeth and South Portland said they are concerned a loss of revenue will force budget cuts in road maintenance.
Chris Cinquemani, the director of communications for Maine Leads, the “nonprofit, non-partisan action and advocacy group” that authored ballot questions 2 and 4, said passing Question 2 is a way to reinforce the need for government to curb spending.
Question 2, if passed, will reduce the excise tax on vehicles at varied rates from the current mill rates assessed by the state.
New vehicle owners are currently assessed $24 in taxes for every $1,000 of the manufacturer’s suggested retail price when registering a vehicle. In the second year, the current rate decreases to $17.50 per $1,000, and $13.50 per $1,000 in the third year.
Four-year-old vehicles are currently assessed at $10 per $1,000, and the rates decrease to $6.50 in the fifth year before settling at $4 at year six and on.
Question 2 will reduce the excise rate to $12 per $1,000 of the MSRP in the first year, to $8 per $1,000 in the second year, and to $4 in the third and ensuing years.
If passed, Question 2 will also eliminate the state 5 percent sales tax and the first three years of excise taxes for hybrid vehicles, those getting more than 40 miles per gallon highway mileage or powered by hydrogen or fuel cells.
Reducing and eliminating those taxes creates a market-based incentive for consumers, said Cinquemani.
Cinquemani said Question 2 will save Mainers an average of $800 over five years in excise taxes and provide an impetus to buy new vehicles and boost the state economy.
An organization that could see its members get a boost by passage of the question is the Maine Auto Dealers Association. According to its Web site, the association is comprised of 134 new car dealers, but association president Tom Brown said no official position has been taken on the referendum question.
“MADA does not get involved with referendum questions,” Brown said.
Brown said buying a vehicle is a complex process with consumer decisions based on factors including economics, family needs and commuting distances.
“Excise tax can be a major component,” Brown said. “Some customers would weigh this in selecting a vehicle.”
Brown said he did not have specific statistics on how many hybrid vehicles have been sold in Maine over the last several years, but said sales had increased as more manufacturers offer them in a range of sizes and styles.
Cinquemani said he was not surprised by the opposition government officials have had to Question 2, but said potential revenue decreases could be offset by increased sales of new vehicles taxed at a higher rate than the vehicles now driven by Mainers.
“It’s simple economics. When something costs less, people buy more of it,” he said.
Hall said he doubted increased sales could fully alleviate Scarborough’s projected loss of $1.5 to $1.6 million in excise tax revenues, and statistics compiled by the town show new vehicles would account for an anticipated $642,000 of the $4.1 million in excise tax the town expects to collect this year.
Excise revenues from vehicles at least six years old are projected to be more than $1.1 million.
Hall said the town expects to pay $2.8 million for road maintenance this year, and he anticipates a second year revenue loss of $2.6 million is Question 2 passes.
In South Portland, Finance Director Greg L’Heureux estimated a loss of $1.5 million in excise tax revenue if Question 2 passes. L’Heureux said the $4.3 million in anticipated revenue comprises more than 15 percent of total municipal revenues not including the schools.
The money pays for operations, equipment and salaries associated with road maintenance that total about $4.4 million.
L’Heureux added the revenue losses on newer cars could be steep because the city has been successful in getting Enterprise Rent-A-Car to register its vehicles in the city as opposed to Saco or Portland.
L’Heureux said the increased revenue has made it hard to determine how excise taxes have fluctuated over the last several years because of a poor economy. In Scarborough, vehicle excise taxes accounted for $4.2 million in 2008, $4.41 million in 2007 and $4.22 million in 2006.
In Cape Elizabeth, the Town Council and School Board have endorsed voting no on the question, citing a projected $758,000 loss from about $1.69 million in excise tax revenues.
In the resolutions, the boards said the losses could lead to a property tax increase of 57 cents per $1,000 of assessed value of property.
Hall said voter approval of questions 2 and 4 could be especially difficult as he envisioned any increases in property taxes needed to offset decreases in excise tax revenues would exceed the cap created by the Taxpayer Bill of Rights and become subject to voter approval.
Voter choice is the intent of both bills, Cinquemani said.
“It keeps the promise of creating tax relief,” he said.
Staff writer David Harry can be reached at 282-4337, ext. 219
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