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November 26, 2013

Lawmakers consider removing service tax exemptions

A committee tasked with rooting out $40 million in state tax deductions, credits or exemptions in order to prevent cuts to the state’s revenue sharing program with municipalities is considering ending tax exemptions for certain amusements, like movies and festivals, as well as for personal care services.

The Bangor Daily News reported that in the committee’s second-to-last hearing, members also proposed restricting participation by retailers in the state’s Business Equipment Tax Reimbursement program. Other proposals included cutting back the Pine Tree Zone program and tax credits for research expenses and high-tech investments. Those plans received sharper criticism than proposals to tax discretionary spending, which had broader committee approval.

The paper reported the committee recommended a new 5.5% tax on “amusements” -- including concerts, amusement parks and zoos -- that the panel estimated could generate up to $20 million. The committee also suggested removing a tax exemption on personal care services, which includes skin care, exercise, haircuts, massage and spa treatments. Most services in the state are not taxed.

The paper reported committee members generally supported targeting exemptions for discretionary spending on recreation, which they argued hit tourists as often as Mainers.

To that end, committee members also put forward a proposal to remove exemptions on basic cable and satellite TV services, courier services and limousine rentals. The state’s budget-writing Appropriations Committee will ultimately decide whether to incorporate those suggestions or others into the second year of the state’s budget, covering July 1, 2013 to June 30, 2015.

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