Downeast Coastal Press
Guest Column
April 13, 2004

Augusta Trying
to Solve Fiscal Crisis
on the Backs of Tourists

By Erich Veyhl

Tourism is increasingly seen as the last hope for the downeast economy, but if a large group of legislators and their supporters get their way it will also be the next target for major tax increases. If you want to discourage something, tax it.

Faced by a statewide backlash against ever increasing property taxes, advocates of expanding government power fear that they have to act or face a revolt. Their reaction so far has been to give the appearance of reform with plans to shift some property taxes to new scapegoats – a shell game that ignores the problem of Maine's total tax burden, one of the worst in the nation, while doing nothing for many or most property tax payers, who would pay even more.

One such scheme now promoted in Augusta seeks new taxes ostensively paid by non-residents but directly imposed on those in the Maine tourist industry, including new taxes on those who rent their own cottage or camp. Property tax reforms would be limited to only primary residences owned by those with the lowest incomes. The new tourist industry taxes would pay for the “reform”.

Rob Brown, an organizer for the Maine Citizen Leadership Fund and Taxpayers for a Fair Budget writes: “Shifting reliance off of the property tax paid by Maine homeowners and on to the sales tax also would export some of the tax responsibility. Further, if we raise the lodging rate, then over 50 percent of that tax would be paid by out-of-staters.” (Bar Harbor Times 3/5/04)

The same assault on the tourism industry is promoted by House Speaker Patrick Colwell (D-Gardiner), who wants to raise taxes on “items that out-of-state residents pay for, like amusements and lodging” (Maine Sunday Telegram 1/25/04).

The wish – promoted in the name of “fairness” – to “export taxes” onto people who can't vote against them is obviously unjust, revealing much about its proponents. The economic concept of an “export” requires offering something of value in exchange for value. In contrast, the “exporting taxes” scheme represents the mentality of a gangster elevated to the realm of economic and political policy – except that an ordinary gangster would be too embarrassed to call his demands the “responsibility” of his defenseless victims while claiming a superior “fairness”.

But taxes cannot be “exported”, and the “practicality” of the planned hit scheme against “outsiders” is just as lacking as its ethics.

The taxes would be paid by those in the Maine tourism industry, not a new out-of-state cash cow exploited by Augusta. Vacationers from out of state are not sitting ducks helplessly waiting to be plucked: A vacation in Maine competes with alternatives in the rest of the country and the world, including the option of not going anywhere when it becomes too expensive. Those in the Maine tourism industry are generally already charging a market price – they cannot arbitrarily raise prices to cover a new tax or anything else and still expect the same number of people to keep coming. Economic principles cannot be repealed by politically decreeing arbitrary higher prices and calling the increase a “tax export”. Non-residents can't vote against Maine tax impositions but they can and do vote with their feet.

Note also the evasion and injustice in promoting the scheme as property tax reform.

Tax reductions only for lower income “homesteads” deliberately exclude other home and property owners, including most homeowners, all businesses and those with their own vacation or seasonal home (who are already paying twice, mostly for subsidies). That includes those who own the tourists' “lodging” directly targeted for new taxes, but all would continue to pay confiscatory property taxes in addition to new or higher sales taxes.

Further, with no limits on total property taxes, the divide and conquer tactic of reducing the tax only for some lessens political resistance against property tax rates continuing to creep up, resulting in a double tax increase for those forced to fund the “reform”.

Augusta's tax and control political mentality is already “exporting” Maine into the status of a Third-World economy while “exporting” people. The “tax export” scam represents the same mentality. We don't need an additional assault on people in the tourism industry – or any other tax increase – falsely promoted as reform by those desperate to continue imposing redistributionist political control until there is no one left to fleece.

A version of this article also appeared as the lead letter to the editor of the Bar Harbor Times 3/18/04.

Copyright © 2004 Erich Veyhl, All Rights Reserved